There is a property glut in Vietnam. Rental rates fell by double digit rates through 2009 - in each of the three cities for which we gathered data (Hanoi, Ho Chi Minh City and Da Nang) and across all three subsectors. Vacancy rates are generally running at around 30%.
Normally, in an economy that has been growing so quickly - that the authorities are tightening both fiscal and monetary policy in order to curb inflationary pressures - rents and capital values would fall until much of the vacant space is absorbed.
However, this is not the process of adjustment that is under way in Vietnam. The government has intervened to re-regulate the commercial Real Estate sector. Approvals for projects that have been proceeding slowly have been revoked. The aim of this measure may be to prevent/discourage speculation in a country where inflation has been rising. More likely, it is a move to curb supply at a time that rental rates are under downwards pressure.
