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Why don’t foreign investors sell 5-star apartments?
Under the current land laws, Vietnamese citizens have the right to own apartments permanently, even ones belonging to 100% foreign-invested projects. However, they have only been able to lease these apartments at exorbitant prices.
Apartments just for lease
Pacific Place building at No 83B Ly Thuong Kiet street in Hanoi is being put under the management of Ever Fortune, a 100% Taiwanese-owned investor, under investment licence NO 705A/GP dated August 16, 2001. The building was put into operation in May 2007.
Chu Minh Ngoc, Pacific Place Building Director and Nguyen Hong Tham, Managing Director, both affirmed that the investor did not have the right to sell apartments; they could only lease apartments for a definite time which is no longer than the validity of the land lease contract the investor signed with the state.
According to Ngoc, Ever Fortune is a 100% foreign-owned company which was established in Vietnam, so it must follow Vietnamese laws. As Ever Fortune’s land lease contract expires in 2043, the company can only provide the apartments here under long-term lease contracts.
Ngoc said that the people who paid big sums of money to lease the apartments know that they are leasing the apartments for a specified time, because they were informed about that before they signed contracts with Ever Fortune.
What do the laws say?
In fact, the government’s decree on the implementation of the Land Law, enacted in 2004, clearly stipulates that foreign investors have the right to sell apartments to users, provided that the foreign investors pay the state the difference between the lease and definitive sale prices.
In 2007, Government Decree No 84 was promulgated, creating a level footing for both domestic and foreign investors in real estate development.
The decree clearly stipulates that Vietnamese people who settle in foreign countries, foreign institutions and individuals can lease land from the state and pay the land lease fee once, or join land bids organised by the state for housing projects for sale or lease.
The land lease time-limit is 70 years. If investors have a demand for the land subsequently, they can apply for extensions (no more than 70 years each time).
If foreign investors sell houses and apartments in housing projects, buyers have the right to have permanent use of the houses and apartments.
Apartment sale will bring less profit than leasing
Clearly, investors of 100% foreign-invested housing projects in Vietnam who have been leasing apartments like Pacific Place understand Vietnamese laws.
If they sold apartments, they would have to pay money to the state, which would not benefit them later. Meanwhile, if the continue to lease the apartments, they do not have to pay those sums of money, and when the apartment lease contracts expire, they have the opportunity to extend their contracts and keep the apartments to lease or sell.
As such, the profit of investors, not the current laws, is the main reason why foreign investors only want to lease apartments.
Trong Tuyen
vietnamnet
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