The price of prime land in Vientiane has witnessed only small increases this year as it nears its peak, according to a major real estate firm.

Rent and Buy Property, Managing Director, Mr Houmphan Sayalath, said his company had been monitoring land prices in Vientiane for several years and had seen only minor increases this year.

“Land prices in prime areas of Vientiane have been stable; one of the main reasons is that the price of land has reached its peak point,” he said.

According to Mr Houmphan, land in the highly-desirable Sihom area in Chanthabouly district and along the Mekong River in central Vientiane is now selling for 23.8 million kip (US$3,000) per square metre, a 3 to 5 percent increase on last year.

He said prices in central Vientiane were not experiencing the massive jumps of a few years ago. Three years ago, land prices in Vat Chan village close to the Mekong riverfront leapt up by 50 percent following the development of the Mekong embankment.

Mr Houmphan said land prices went up not just as a result of demand for the area and economic growth, but also because of development projects in the area.

“It is normal to see prices of land skyrocket once there are infrastructure development projects in the area,” he said.

Mr Houmphan said land prices on newly-built roads in the city’s outskirts were climbing faster than those in prime areas, possibly as buyers were eyeing profits in the land trade business.

Despite the rapid increase in Vientiane la nd prices in recent years, the cost of purchasing land remains low compared to neighbouring countries – making Laos more attractive to investors.

The land price in Laos is expected to increase after the Asean Economic Community comes into being in 2015, w ith the establishment of a single market and production base in the region likely to create a huge inflow of foreign investment and higher demand for residential and commercial land.

Mr Houmphan said a number of Lao businesspeople had built apartments and offices in readiness for regional economic integration in 2015.

He said real estate companies in Laos would see more competition due to the higher supply of rental apartments and offices.

Observers say the government’s decision to tighten expenditure, especially for infrastructure projects, would be a contributing factor to lower land prices. They explained that banks would be hesitant to issue offer loans for real estate development, which would negatively affect land sales.

Many foreign investors who have obtained land concessions from the government have been slow to carry out proposed development projects – an indicator that demand for land and property is slowing.

By: Vientiane Times, 20 Nov 2013