Foreigners snatching up real estate in Vietnam, while Vietnamese living abroad remain wary
written by TrungLun0112
at Tuesday, 10 September 2013
Vietnamese who live abroad have retreated from the country’s real estate market, wary of investing in property in Vietnam after the economic slowdown. In 2013, investments in property from Vietnamese nationals living overseas dropped by half compared with 2011.
Remittances from Vietnamese living abroad have reached $2.5 billion this year, mainly from the United States, South Korea, other Southeast Asian countries and Europe, and The State Bank of Vietnam expects a 10-15 percent increase in total remittances by year’s end.
But although Vietnamese nationals remain cautious regarding the real estate market at home, other foreigners indicate an increased interest in the country’s property.
“The market is starting to thaw,” Trinh BaoQuoc, the chief executive of Son Kim Land, told the World Property Channel.
Real estate developers were badly hit when prices on property dropped two years ago during the global financial crisis. The subsequent increased transparency of the real estate market may attract more potential developers.
“Investors across Asia are favoring a more direct form of investment, where visibility of deals is key,” Marc Townsend, the managing director of the Vietnam office of the property brokerage CBRE, said during the presentation at the Hilton Hanoi Opera.
A study by Professor Graeme Newell for Asia Pacific Real Estate Association revealed that Vietnam has the smallest real estate market in the region with only $21 billion worth investable property. Despite the tiny size, real estate giants are present. Warburg Pincus, a US-based global private equity firm, bought shares in Vietnam’s largest private real estate company Vingroup, accumulating a stake worth US $200 million.
A year ago financial experts were pessimistic about the country’s property market as many real estate projects have stalled due to the slow economic growth. Nonetheless, the current foreign investment activity has the potential to improve the slumping economy.
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