Viet Kieu (overseas Vietnamese) will be allowed to purchase real estate in their own names from September 1, 2009. However, experts doubt the new policy will cause any immediate changes in the real estate market.
Ownership transfer transactions will increase
Two months ago, Luong’s relative in Germany asked her to help buy another apartment on Hoang Hoa Tham street in Hanoi.
According to Luong, the relative decided to invest money in real estate in Vietnam after he heard that apartment prices in Hanoi keep rising. Luong has purchased five apartments so far this year as ‘authorised’ by her Viet Kieu relatives.
Luong said that when the new policy on allowing Viet Kieu to purchase houses in Vietnam takes effect on September 1, she will transfer ownership to the real owners of the apartments.
Nguyen Van Tam, Director of GTC Real Estate, part of the TSQ Finance Group owned by a Viet Kieu in Poland, also thinks that when the new policy becomes effective, there will be more transfers of ownership than purchases.
In fact, Viet Kieu have been purchasing houses, apartments and time-shares in Vietnam for a long time as investments. They are well-represented in the most attractive real estate market segments.
The 13 hectare, $59 million ‘Viet Kieu Chau Au (European) Village’ is a 100 percent Viet Kieu-financed project east of Hanoi City, kicked off in 2007. Another high grade apartment project, TSQ’s ‘Euro Land,’ capitalized at $70 million, is expected to cover an area of 8,200 square metre in the Mo Lao new urban area west of central Hanoi.
According to Tam, 35 to 40 percent of the buyers in Viet Kieu Chau Au village are Viet Kieu. Tam claimed that it is not clear if the Viet Kieu buy the houses and apartments for their own use or for speculation. However, he believes that many of them intend to live in the units because they have been keeping a close watch over the implementation of the project and adjusting the plans to their individual preference.
It is estimated that 60-70 percent of buyers now will be buying the apartments from original buyers instead of purchasing directly from the investor. The apartments are offered at $1,000 per square metre, up from $900-920 per square metre. Villas are now on offer at 55 million dong (about $3000) per square metre.
The director of a real estate brokerage said that speculators well understand the new policy and they have put down deposits on a lot of apartments and villas at the projects which they think will be attractive to Viet Kieu. However, they have been discouraged by the lower-than-expected influx of investment money from overseas Vietnamese buyers.
Lam, a real estate broker, said that the market has been quiet over the last month with very few successful transactions.
The market will not see big changes soon
Commenting about the outlook for Viet Kieu buyers, Tam said that more sales will be made, but big changes won’t be evident when the new policy takes effect. In this market, so far characterized by ‘underground transactions,’ investors will spend some time watching to see how the new policy is implemented and defining the market tendency.
Tam has sold units in Viet Kieu Chau Au Village. He doubts that Viet Kieu house purchases will affect the real estate market in short term. Not all Viet Kieu can afford real estate products in Vietnam. Some experts believe that the prices have been pushed up high by speculators.
Tam said that Viet Kieu always think more carefully than Vietnamese people before they decide to purchase houses or apartments. At first, they will want to see how the revised law is implemented, and be confident that the market will develop in a stable way.
According to the Ministry of Construction, only 140 Viet Kieu have officially purchased houses in Vietnam since 2001, when certain categories of overseas Vietnamese were permitted to purchase houses in a trial basis. However, the revised law drops virtually all restrictions on such transactions. That’s why experts believe that in long term, the real estate market for Viet Kieu will see strong growth.
In 2008, the members of the Vietnamese diaspora sent $8 billion in remittances to their relatives in Vietnam, an increase of 19 percent over 2007. Much of this money is invested in small businesses and projects.
It is estimated that some 3,000 businesses which have capital contribution by Viet Kieu and 60 percent of such projects have been going profitably. The figures show the great potentials of the market and make people believe that Viet Kieu investors will put money into many more investment projects.
Source: VNEconomy/ Photo credit by: www.followsteph.com
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