The Real Deal New York

International Briefs

March 31, 2008


Ho Chi Minh City sees rapid growth

Several years of free-market trade has boosted Vietnam’s economy, leading the way to its admission into the World Trade Organization last year. Now, the nation’s largest city, Ho Chi Minh City, is experiencing rapid economic growth, with much commercial and residential real estate development.

Beginning last summer, local investors made a batch of preconstruction purchases in the city. Prices for some Ho Chi Minh City luxury apartments, which range up to 2,700 square feet in size, tripled in 2007, according to the International Herald Tribune.

The government has released blueprints for planned towns in several areas nearby, like the 8,250-acre Saigon South, expected to have a population of 1 million.

The demand for luxury condo developments in Ho Chi Minh City is so high that for one such project, the Vista, hundreds of people camped out in front of the sales office the night before sales began. Unit prices there leapt from $125 to $250 a square foot over the course of a few weeks.

But many experts are worried too much investment in these projects is speculative, and that prices are likely to see a correction soon.

The nation’s economy is growing at an annual rate of 8 percent.

In the commercial sector, low supply has kept rents growing steadily, up 40 percent in the past year in Ho Chi Minh City, with an average of around $70 a square foot expected by local commercial brokers in 2008.

Baja gets new resort town

In 10 years, a 3,200-hectare chunk of Baja California now speckled with construction will be a town of 6,000 homes known as Loreto Bay Resort, if all goes as planned.

A joint venture between the Mexican government and Citigroup is developing the project, which is expected to attract a new wave of baby-boomer expatriates retiring from the United States to its southern neighbor.

Recent pushes by Mexican leaders to attract foreign buyers have brought tougher regulation to the housing market, so expatriates have been less worried about the reliability of their brokers and the authenticity of land titles. Another selling point for American retirees: Mexican property taxes are about one-tenth what they are here.

Properties at Loreto Bay run at a fraction of the prices seen in well-established resort destinations like Los Cabos or Cancun. A 3,800-square-foot penthouse unit at Loreto Bay sold for $625,000 in 2004, compared to the upwards of $2.5 million one would have paid for a comparable apartment in well-established Cabo that year.

Homes at Loreto Bay range in price from $300,000 for a one-bedroom to $1.5 million for a custom house. A three-bedroom, two-bath with a roof terrace recently sold for around $400,000.

Estimates of the eventual total cost of the development range from $3 to $6 billion.

Resort home market holds its own in Portugal

As Portugal faces a rise in construction costs and increasing competition from other nations in Europe’s second home market, the government’s effort to reinvigorate tourism through increased marketing may be paying off.

Morocco, Brazil, Argentina, Croatia and Bulgaria are among the new entrants offering second home destinations with cheaper housing. Resort homes in Croatia and Bulgaria cost one-third the price of a comparable home in Portugal, a source told the International Herald Tribune.

Still, 2006 saw 70,000 foreign nationals owning a home in Portugal, accounting for 4 percent of the Iberian housing market, Secretary of State for Tourism Bernardo Trindade told the International Herald Tribune. His agency predicts the figure will grow 5 percent annually over the next few years.

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