Remittances boost real estate market

Real estate market attracts remittances

According to statistics from the Ministry of Labor, War Invalids and Social Affairs, there are currently about 6 million Vietnamese people living and working in more than 130 countries and territories and about 650,000 Vietnamese export workers working in 40 countries and territories. The amount of remittances to Vietnam in the past 10 years has always maintained its position in the Top 10 countries with the largest amount of remittances in the world, reaching over 190 billion USD. In 2023 alone, the amount of remittances nationwide is estimated to reach about 16 billion USD, an increase of 32% compared to 2022. Notably, it is estimated that each year up to 25% of remittances are "deposited" in the real estate market.

According to the State Bank, remittances will continue to grow strongly in the first 6 months of 2024 thanks to the Government's policies to encourage and create favorable conditions for overseas Vietnamese to return home to invest and do business through Vietnamese representative agencies abroad.

Along with FDI capital flows, remittances have contributed to increasing foreign currency flows, meeting domestic demand, supplementing resources to maintain exchange rate policies, foreign exchange reserves, and promoting the growth of economic sectors, including the real estate sector which is "thirsty for capital".

According to real estate experts, in the long term, remittances will be a strong source of demand to help the market develop, aiming at the apartment segment in central areas, which can be exploited for rental operations or the high-end villa segment in large cities and resort real estate products suitable for the payment capacity of overseas Vietnamese.

Currently in Hanoi and Ho Chi Minh City, the mid-range and high-end residential real estate segments in the central area always attract investment interest from overseas Vietnamese. Typically, apartment projects in Thu Thiem, Thao Dien (Ho Chi Minh City) or products in the Vinhome ecosystem (Hanoi)... always reach a rate of 20 - 30% of the number of products sold to overseas Vietnamese.

In the context of the laws related to the real estate market that have just been passed by the National Assembly and come into effect, with many flexible regulations for overseas Vietnamese, the real estate market is expected to attract more capital from remittances and foreign investment funds participating in real estate projects, to increase the supply of products, creating more internationalized types of real estate. Therefore, businesses need to continue researching and building real estate projects that meet international standards in terms of design, quality, and amenities.

Open and transparent legal corridor

According to a report by Savills Vietnam Co., Ltd. (a company providing comprehensive international real estate consulting services in Vietnam), Vietnamese law has so far provided many regulations allowing overseas Vietnamese to buy houses in Vietnam, but due to complicated paperwork procedures, many investors are discouraged or choose to ask relatives to stand in their names when buying real estate in the country. This reality has led to many disputes and lawsuits when incidents occur between the parties involved.

“Untying” this issue, the 2024 Land Law, which has just been approved by the National Assembly and will take effect from August 1, 2024 (5 months earlier than expected), has amended and supplemented many new regulations, notably expanding land use rights for overseas Vietnamese. Specifically, Clause 3 and Clause 6, Article 4 on “Land users” stipulate that land users who are allocated land, leased land, have their land use rights recognized by the State, are using land stably, and are eligible for a certificate of land use rights and ownership of assets attached to land, include: Domestic individuals, Vietnamese people residing abroad who are Vietnamese citizens; people of Vietnamese origin residing abroad...

Dr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association, said that the new legal corridor with clearer, more open and flexible regulations creates favorable conditions for overseas Vietnamese to invest and own houses in Vietnam, attracting remittances into the real estate market.

To attract this resource, in addition to promoting the implementation of the Land Law, State management agencies need to continue investing in improving transport infrastructure, telecommunications and other public services to increase competitiveness for the real estate market; at the same time, it is necessary to reduce or exempt taxes for overseas Vietnamese investing in real estate.

In addition, real estate businesses need to cooperate with reputable real estate agents and brokers in the overseas Vietnamese community to search for and introduce potential customers, as well as provide after-sales support services such as property management, maintenance, and repair, helping overseas Vietnamese feel secure in their investments.

From a legal perspective, Master Nguyen Van Dinh, a real estate legal expert, commented that the fundamental amendments to the land access policies of the 2024 Land Law, the 2023 Housing Law and the 2023 Real Estate Business Law will better meet the aspirations of overseas Vietnamese, helping to increase the attraction of remittances to unlock resources for socio-economic development.