Hong Kong's Luks Group has clinched control of a Ho Chi Minh City property project, in a sign that Vietnamese firms are heeding government edicts to scale back investment in an overheated economy.

Trading company Trans-Asia Viet Corp, one of many Vietnamese joint-stock and state enterprises that has dabbled in the hot property market, had been the sole developer of the 200,000 sq m project.

But with banks clamping down on lending for construction and the government telling state firms to cut investment, the company sold a 75 percent stake in the project for HK$475.4 million ($60.9 million).

"Given the large-scale and fast-pace development and urbanization now undergoing in Ho Chi Minh City...the Group believes that the land has huge potential for re-development into residential and commercial properties," Luks' chairman Luk King Tin said in a statement on Tuesday.

"The project presents an excellent opportunity for the group to expand its presence in the property development business in Ho Chi Minh City," he added.

As Vietnam's economy boomed, thanks to an inflow of foreign direct investment, property prices in some areas of Ho Chi Minh City and Hanoi have trebled in the last couple of years.

But prices have dropped about 25 percent this year as the government struggled to cool the economy to narrow its current account deficit and contain inflation, which is approaching 30 percent thanks to soaring food, fuel and raw material prices.

With lending rates hiked to as much as 22 percent in the last year from about 10 percent, analysts believe Vietnamese companies will struggle when they refinance loans and will need to sell assets or cancel investment projects.

Shares in Luks Group eased 0.28 percent to HK$3.52 in late trade on Tuesday.

Source: Reuters