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Dollar price fluctuations frustrate real estate buyers
Violations in real estate price quotations are so popular that people think that quoting prices in dollar is inevitable. Yet this practice benefits only the sellers, while buyers bear the burden of this illegal activity.
Under the Ordinance on Foreign Exchange Management, all transactions in Vietnam must be in dong, yet most Hanoi real estate projects quote in dollars.
Keangnam Landmark Tower project is but one example. Apartment prices are quoted in dollars and payment is also been requested in dollars. If buyers pay in dong, they must pay sums equal to quoted dollar prices using the black market exchange rate.
CBRE Vietnam or Savills Vietnam cite prices for this project at $2800-3300 per square metre, no matter how the dong/dollar exchange rate fluctuates.
Similarly, apartment pricetags at Indochina Plaza Hanoi project have also been posted in dollars, $2800 per square metre. Sky City Tower apartments are listed at $2300 per square metre, Mulbery Lane $1800, Parkcity $3000.
Even 100 percent Vietnamese-invested projects post prices and require payment in dollars. Usilk urban area project, Mipec Tower, Thanh Cong Tower, and No. 302 Cau Giay street project all are being quoted in dollars, at $1000-2000 per square metre.
In early September 2010, the State Bank of Vietnam (SBV) released a document, requesting Hanoi and HCM City branches examine price listings in dollars.
“Quoting prices in dollars not only violates current laws, but it also affects the people’s benefit,” the SBV document reads.
The Ministry of Industry and Trade also released Circular No. 11, guiding implementation of Decree 107 on prices. The circular stipulates that violators must pay fines of 20-30 million dong.
However, to date, no real estate developer has fined. Even if they are punished, the maximum fine of 30 million dong is too small compared with the huge profits that developers can obtain each time SBV adjusts the dong/dollar exchange rate.
According to Nguyen Chi Thanh, General Director of Ho Tay International Joint Venture, real estate developers set up prices in dollars to assure that their profits will not be influenced by any exchange rate fluctuations.
Yet buyers suffer from this “habit.” Since the third quarter of 2008, when Keangnam Group began selling apartments, the interbank exchange rate has increased by 12 percent. This means that real estate developers and agents can profit by hundreds of millions of dong because they are paid in dollars.
Nguyen Ha Xuan bought an apartment at Keangnam Landmark Tower. After SBV raised the exchange rate from 18,544 dong per dollar to 18,932 dong per dollar on August 17, the dollar price on the black market also rose from 19,270 dong to 19,500 dong. As such, to buy a 100 square metre apartment priced at $3000 per square metre, buyers must fork over tens of millions of dong more.
vietnamnet, Dau tu
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