One fifth of the kieu hoi (overseas remittance) volume in 2015 has gone into the real estate sector, according to the State Bank of Vietnam (SBV).
The decision on allowing foreigners to own houses in Vietnam and the expected high growth rate have encouraged kieu hoi flow to Vietnam recently.
Marc Townsend, CEO of CBRE Vietnam, a real estate service provider, said when the first signs of the real estate market recovery appeared in 2014, many people rushed to borrow money to buy houses.
However, he now can see a growing tendency of buying houses with money from kieu hoi.
The SBV’s latest report showed that one-fifth of the kieu hoi volume remitted to Vietnam in 2015 has flown into the real estate sector.
It predicted that the kieu hoi volume in 2016 would reach a record high of $14 billion this year, an increase of 15 percent compared with 2015, which is 6.4 percent of Vietnam’s GDP.
One fifth of the kieu hoi (overseas remittance) volume in 2015 has gone into the real estate sector
Meanwhile, other institutions predict higher volumes of kieu hoi to Vietnam. According to the National Finance Supervision Council, about $2.7 billion worth of kieu hoi is remitted to Vietnam every year through unofficial channels.
An official report showed that over 7,000 Viet Kieu (overseas Vietnamese) have owned houses in Vietnam since the amended Housing Law, allowing Viet Kieu to buy houses in Vietnam, was approved by the National Assembly in November 2014.
Nguyen Hoang Minh, deputy director of SBV’s HCM City Branch, said kieu hoi has returned to the real estate market after a long period of interruption as the market was in ‘hibernation’ with very few successful transactions. As the market has warmed up, Viet Kieu can see big investment opportunities there.
Buying houses to lease to expats is popular among Viet Kieu.
Vu Ngoc Mai, business director of a telecom equipment company in Belgium who has a Dutch passport, said she surfs the internet every day to look for opportunities to invest in real estate. In 2012, she remitted money to Vietnam to buy an apartment in Hanoi for lease.
“I am now looking for another apartment to lease to expats, the number of whom will be increasing rapidly in Vietnam. The apartment will be my savings which I will need when I return to Vietnam,” Mai said.
Stephen Wyatt, CEO of Jones Lang LaSalle Vietnam, said Vietnam will become the new production base of the world thanks to its high productivity and low labor costs. This means that more and more foreign businesses, including those present in China, would join the Vietnamese market.