HO CHI MINH CITY, Vietnam — Foreign companies bullish about Vietnam's economic future are scrambling for real estate but finding a murky market where contracts mean little and no one seems to know who owns what.
Rents on office and living space for foreigners have doubled in the capital Hanoi in the past year and have also soared in the southern commercial center, Ho Chi Minh City, formerly Saigon.
Vietnam has allowed about 30 companies from Hong Kong, France, Australia, Japan, Malaysia, Thailand, Taiwan and China to build or renovate hotels with local partners since 1988.
But foreign business people still complain that there are too few hotel rooms.
"While real estate is going into a recession in the rest of the world, in Vietnam it's booming," says Paul Fairhead, an Australian businessman who has spent two years in Hanoi looking at investment prospects.
Vietnam has no mortgage law, no law on real estate ownership and no land title system.
A scandal over home ownership erupted recently in Ho Chi Minh City, angering national assembly delegates and prompting Prime Minister Vo Van Kiet to sign a special housing decree.
People with villas in the city, where many civil servants pay rents of just a few dollars a month, have made big profits renting to foreigners for $2,000 to $6,000.
"There has been an explosion in needs by foreign companies. This has created a new class of nouveau riche among those who can rent villas to them," a Vietnamese journalist in Ho Chi Minh City said.
This year city authorities began selling the villas, mostly confiscated by communist forces who won the Vietnam War in 1975, to their occupants at cheap prices.
Tenants were generally senior state officials and communist party cadres.
In the ensuing public outcry, Kiet signed a decree reversing a city "house pricing decision" that allowed the sales and ordered the 380 villas already sold to be returned to the state.
"The house pricing decision . . . was considered by some national assembly delegates as a collective corruption act," said another local journalist.
Foreigners see other obstacles to real estate deals.
"The bottom line is, everyone has a huge belief in Vietnam taking off. But there's a lot of talk and not yet much action . . . there's no financing," said a European real estate agent.
Still, some deals are being struck.
Hong Kong's New World Group, a major hotel chain, has signed a 25-year joint venture with state-owned Saigon Tourist to build a $60-million hotel in Ho Chi Minh City.
Construction is expected to begin soon on the four-star, 557-room hotel, the first such foreign hotel venture in the city since the war.
A few blocks away, the Yao Teh International Development Co. of Taiwan is finishing a $10-million renovation of a 16-story office building.
The Taipei office of international property consultants Richard Ellis has been offering foreign companies space in the building for monthly rents ranging from $4.20 to $7 per square foot.
Up the street, a Hong Kong company is renovating the Century Saigon hotel, which will be managed by Hong Kong based-Century International Hotels. An Australian company has renovated the nearby Norfolk Hotel.
First Pacific Land Ltd. of Hong Kong and Straits Steamship Land Ltd. of Singapore are hoping to get a government license by mid-year to build a $75-million commercial complex in Ho Chi Minh City.
One European hotelier in Ho Chi Minh City said red tape could be a nightmare, but Holiday Inn, Peninsula, Shangri-la, Ramada and other big hotel groups are exploring deals.
"There is so much potential here. So they all want to run and get here first," he said.
Some of the deals sound pretty heady.
Business people say Renong Group, a Malaysian conglomerate negotiating hotel deals in Ho Chi Minh City, Hanoi and central Danang, wants to build a 2,500-acre "twin city" to Ho Chi Minh City on the far side of the Saigon River.