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Land fever lures moneybags to Vietnam’s Phu Quoc Island

Land fever lures moneybags to Vietnam’s Phu Quoc Island

Thursday, June 25, 2015, 11:18 GMT+7

Land investors and speculators put money in backpacks so they can conduct transactions in cash any time on Phu Quoc Island, where the highest land fever in a decade is going on.

A number of costly projects are being developed on the island, which is a district administered by the southern province of Kien Giang, where land prices are skyrocketing and investors are flocking to purchase land pieces.

Phu Quoc has been planned for an exclusive economic zone by 2020 in a proposal approved by Vietnamese Prime Minister Nguyen Tan Dung.

The government has created exclusive mechanisms for Phu Quoc, and the island is also enjoying the highest-ever preferential treatments to have its traffic, infrastructure and energy systems developed up to its potential.

The island, now a popular destination for retreats with its white-sand beaches and high-quality seafood, is thus attracting increasing investment from resort and realty developers and many other investors as it transforms from a resort island into an economic hub.

And land investors are interested in the island, too.

The price of a land plot on Phu Quoc now ranges from VND2 billion (US$91,870) to VND40 billion ($1.84 million) and even VND200 billion ($9.19 million), depending on how close it is to the beach.

“If you do not accept the price quoted today, it will be much higher when you come back in only a few days,” Nguyen Van Trai, a broker, told Tuoi Tre (Youth) newspaper.

Trai is an investor-turned-broker, who now possesses six pieces of land on the island whose prices are up to seven times higher than what he paid to purchase them years ago.

“I bought a land plot for VND2.1 billion in 2013 and now people are willing to pay VND17 billion [$780,891] for it, but I still don’t accept,” he said.

Trai said all land plots on sale on Phu Quoc have valid papers, and buyers can feel free to check with local authorities before placing a deposit.

Transactions are made at major cafés in the town of Duong Dong, where buyers keep dozens of billions of dong in backpacks to pay in cash.

The owner of one café revealed that many of the land buyers are from Hanoi.

There is even a “Hanoi village” in Duong To Commune, where a number of land plots and resorts are owned by people from the Vietnamese capital.

Le Quang Minh, head of Phu Quoc’s natural resources and environment bureau, said most of the land buyers are speculators, who purchase and resell the land plots to earn profits.

“I asked a buyer from Hanoi how she could have so much money to buy land [on Phu Quoc], and she said she had sold her land pieces in the capital to seek profit here,” Minh told Tuoi Tre.

“Many spend dozens of billions of dong on the land and do nothing but wait for a chance to resell, which indicates that land on Phu Quoc is being speculated.”

The “land mania” on Phu Quoc is a surprise to local authorities.

The Phu Quoc administration recently auctioned a 3,000-square-meter land plot, and was shocked to see the hefty prices investors were willing to bid.

In 2013 no buyers were interested in that piece of land, despite a cheap price of only VND11 million ($500) a square meter. Two years later, investors bid more than VND30 million ($1,378) per square meter.

The district’s tax collection from realty transactions has thus also soared.                                          

“We used to get only VND1.5 billion [$68,902] per month from property transfer taxes, but the figure is now VND10.5 billion [$482,315],” said Doan Van Duc, head of the Phu Quoc taxation agency.

His agency received nearly 4,500 tax declarations for real estate transactions in the first half of this year.

The land plots that now cost dozens of millions of dong are in fact quoted at only VND8 million ($367) per square meter, according to the price list approved by the Phu Quoc administration.

“But the price has been sent to VND15-20 million,” Duc said.

The official attributed the demand for land purchases to the government’s plan to turn the island into an economic hub, and several projects of high-profile developers such as Vingroup.

“The market has already peaked and the risk of a bubble is extremely high,” he warned. 

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