'Vietnam is a long way from being overbuilt,' says Marc Townsend, CBRE's managing director for Vietnam. 'If anything, there is too much money chasing too little stock. For the next two years, capital values for condos, town houses and villas will go up.'

A recent CBRE survey reveals high-end condo projects in Ho Chi Minh City are now fetching between US$1,000 and US$3,400 per square metre, depending on location. One is River Garden, a high-quality residential project, for which CBRE has been appointed sole marketing and management agent. The 210-apartment high-rise consists of two-bedroom to four-bedroom units overlooking the Saigon River in An Phu, District1.

In nearby An Phu, District2 sits the Villa Riviera, an exclusive collection of 101 villas developed by the Keppel Group and slated for completion in July. The four-bedroom to five-bedroom homes come in eight design layouts, with prices starting at US$400,000, and were sold out by January this year, mostly to local Vietnamese.

Keppel Land's chief representative in Vietnam, Linson Lim, says: 'In light of the strong economic growth recorded by Vietnam in recent years, the property market is anticipated to remain robust in the near to mid-term.

'With rising affluence and home ownership aspirations, we believe the real estate market in Vietnam will continue to perform well.'

Karl John, a 10-year Hanoi resident and chief executive of Vietnam-based investment consulting firm TCK Group, says a similar high-price, high-quality, high-demand situation faces homebuyers in the capital.

'Property developers are rapidly building new commercial and residential developments, and there is no end in sight,' says Mr John. 'Vietnamese increasingly demand better quality housing and business facilities, and that demand has, in recent years, pushed up land and house prices in Hanoi and Ho Chi Minh City, and provided developers with the commercial incentive to build.'

Individual foreign investors looking to buy a condo or a villa face obstacles, as foreigners cannot own freehold property in Vietnam.

'However, they are entitled to buy leasehold properties with a lease term of up to 50 years,' says CBRE associate director Nguyen Quoc Tuan.

Foreigners can lease land to implement development projects, for which they receive transferable house ownership certificates for the duration of their allotted investment period, but they cannot own units for personal use.

Law firm Johnson Stokes& Master has devised a structure to step around this and it is being implemented by IndoChina Capital. A stake is offered in a foreign company that owns a Vietnamese firm, which in turn owns the property. All the shareholders own all the units, but an offshore agreement assigns one unit per owner. The units can be lived in or rented out.

A more conventional investment approach, albeit one you cannot call home, is a venture fund targeting Vietnam property development.

Mr John pointed to VinaCapital, which 'recently increased the size of its Vietnam Opportunity Fund to US$171 million, and its US$205 million Vinaland Fund, which was Vietnam's best-performing fund last year'.

But Mr John's firm is trying another approach. 'TCK Group is in the process of establishing an investment fund to acquire land for projects on Phu Quoc Island. I believe this attractive island will be the next Bali or Phuket. The fund will also allow potential homebuyers to acquire a holiday or retirement home. Phu Quoc is the only location in Vietnam where a foreign individual can 'purchase' land.'

Most of those who directly or indirectly invest in Vietnamese property developments are from Hong Kong, Singapore, Japan and Korea. They also dominate the serviced apartment segment, both as developers and clients.

Foreign buyers are usually executives with short-term contracts and no interest in long-term leases. CBRE forecasts more multinationals entering Vietnam and predicts serviced apartment rents will increase by 10 per cent this year based on occupancy rates above 95 per cent and a limited increase in supply.

Ascott International Management spokeswoman Celina Low agrees. 'We have observed an increasing trend of business travellers choosing serviced residences as an accommodation option over condominiums and hotels because of their value proposition,' she says.

Ascott has 775 serviced residence units in five properties in Vietnam, including its Somerset apartment buildings in Ho Chi Minh City and Hanoi, which will open later this year.

While serviced apartments offer a short-term residency solution, they don't meet the desires of the long-stay market of potential condo and villa owners in the larger cities.

Contractual strategies can work around some of the legal technicalities, and this will become more important as investors shift their sights to the beaches of Danang and Hoi An, though a more solid solution is required.