Vietnam has passed a law allowing certain categories of foreigners to buy apartments beginning in 2009, the first time the Communist country has allowed non-citizens to own real estate, the government website announced.

The country’s National Assembly approved the new law, with 88 per cent of deputies voting for it.

Foreigners eligible under the law can only buy apartments in developments approved for foreign residency, not houses or land. Ownership will be for a term of 50 years, by which time the foreign owners must sell or transfer the property.

Real estate developers said the law was likely to give a much needed boost to Vietnam’s property markets, which have softened recently after explosive growth in 2007.

"It could have a 20 to 30 per cent impact in terms of rising prices," said William Badger of Leonidas Management, a subsidiary of the Tung Shing Group. "You’re talking about people with money in hand, so we would imagine that a lot of people will want to buy."

"Similar laws have been passed in China, Thailand and Malaysia," said Misha Chellam, assistant to the chairman of Hanoi-based developer Vietnam Land. "Each time in those countries when a law like this was passed, it significantly boosted demand."