Domestic market frozen, people seek to buy overseas properties

VietNamNet Bridge – Overseas remittance to Vietnam has been increasing steadily. However, the cash flow now does not go into the real estate sector any more. Meanwhile, a lot of Vietnamese are seeking to buy real estate overseas.

Vietnam, real estate market, low demand, the rich, expensive

Domestic frozen market makes investors hesitant

Economists have pointed out that a high proportion of overseas remittance to Vietnam has been poured into the real estate market, which was considered the most lucrative business field.

A report by the National Finance Supervision Council showed that 52 percent of the nine billion dollars worth of overseas remittance to Vietnam in 2011 was injected in the real estate sector. Meanwhile, despite the global economic difficulties, the overseas remittance in 2012 still increased by 20 percent in comparison with 2011, reaching $11 billion.

However, the cash flow to the market has slowed down recently because of the weak demand and few successful transactions.

Pham Duc Toan, a senior executive of EZ Property, said the decrease of the capital flow to the real estate market is “understandable.” Once investors do not see big business opportunities, they would pour their money into more profitable investment channels.

Meanwhile, no signs of improvement in the real estate market in 2013 have been seen. The demand remains low which makes the market liquidity weak. If investors continue pouring money into the real estate market, they would see their capital to be “buried” in the market for indefinite time.

According to Nguyen Hoang Nam from Infor real estate trading floor, the investors of real estate projects, the quality of the construction works and the project implementation speed are the three most important factors buyers would consider when deciding whether to buy the products.

Viet Kieu (overseas remittance), the real customers of real estate projects, who buy products under the names of their relatives in Vietnam, especially keep cautious when considering the three factors. Nam said they may accept the prices a little higher than the average prices, but they would only spend money in safe deals.

Vietnamese rush to buy houses overseas

Experts have noted a strong outflow of the foreign currencies from Vietnam when many Vietnamese remit money abroad to make payment for the real estate purchases in foreign countries.

Even though current laws on financial management and foreign currency remittance abroad are not open, Vietnamese still can find the ways to bring dollars abroad to buy houses.

Some months ago, the public was stirred up by the news that two Vietnamese investors spent $900,000 to buy the smallest town in the US – Buford. It was not a surprise that Vietnamese could afford a town, because Vietnamese are getting richer. The thing that the public was most interested in was how the buyers could make payment for the deal.

The real estate price in the US is believed to have dropped to the deepest low, which has prompted Vietnamese people to buy houses in the country.

The Vietnam Real Estate Association has confirmed that the demand of Vietnamese people for buying foreign real estate has increased sharply in recent years. Most of the buyers target the US and Australian markets, where they believe the prices are “reasonable.”

According to Coldwell Banker Singapore, in 2010, Vietnamese house purchases in Singapore accounted for 3.2 percent of the total real estate transactions in the country.

Some months ago, a high end apartment project in London was introduced in Hanoi which aimed to seek Vietnamese buyers. The lowest sale price offered was 7 million pounds.

Duy Anh

Vietnam, real estate market, low demand, the rich, expensive