A local property developer has been arrested by police in Vietnam following claims two Australian investors have been conned out of almost $9 million.

Australians Lam Yin Cho and Lee Park Ling are understood to have been caught up in the fraud after becoming involved in an outsourced government scheme to buld a complex of apartments and offices in Ho Chi Minh City.

According to the Tuoitrenews website, the men entered into a deal with a local businessman, Hoang Van Luong, to construct two apartment blocks in the city in 2010.

However, the Australians were unaware the project had not received official approval.

Police say Cho and Ling sent a total of $US6.41 million ($A8.26 million) to an authorised investment broker, and another $US485,000 to Luong himself between September 2010 and January 2012.

After, Luong reportedly failed to follow through and refused to return the money.

The investors then filed complaints which led to his arrest.