Viet Kieu’s property interests enjoying a big renaissance

More overseas Vietnamese are getting teeth into the local property scene

The Association of Overseas Vietnamese’s general secretary Pham Thieu Hoa told VIR the real estate sector was still the most attractive local business segment to Viet Kieu.

One of the main reasons, Hoa said, was because the economy was growing stronger.

“This growth will increase demand for apartments, offices and retail spaces,” Hoa said.

He said Viet Kieu had been making contributions to the competitiveness and variety of the real estate market.

The Ministry of Planning and Investment (MPI) predicted that by the end of 2010, Viet Kieu real estate investments would make up around 70 per cent of the total remittances.

The World Bank predicted that Vietnam’s remittances would reach $7.2 billion in 2010, up 8.3 per cent year-on-year, the second largest country receiving remittances in Southeast Asia.

Figures from the MPI stated that to the end of the third quarter of this year, total newly registered capital in the real estate sector was $2.75 billion, occupying 22.6 per cent of the total investments of the country.

The real estate sector now stands at the third largest position in foreign direct investments, behind the manufacturing and processing sectors.

According to John Nhat Nguyen, managing director of NAC Real Estate, Viet Kieu  are always interested in Vietnam’s real estate market.

Nguyen said Vietnam’s real estate prices were attractive and lower than other countries in the region.

Meanwhile, other previously dominant markets such as Thailand, Cambodia and Laos were less attractive than Vietnam and foreign exchange rates between the Vietnamese dong and the US dollar were quite good for investors.

NAC is a commercial real estate consulting company that aims to help the Viet Kieu community with its real estate needs all over the world. NAC in recent years has been working with international investment banks and developers in Vietnam to develop sales programmes for Viet Kieu sectors.

The company has also deployed three real estate information centres in Ho Chi Minh City, Danang and Hanoi for Viet Kieu when coming back to Vietnam to invest in the property market.

Moreover, Hoa added that the policy to expand the rights and types of Viet Kieu and foreigners eligible to buy houses and land in Vietnam would further increase demand.

“They are strong financial customers and many of them have demands to own a house or land in Vietnam, and Vietnamese investors should pay more attention to the demands of Viet Kieu,” he added.

Besides this, Hoa predicted that in the future,  training, consulting and management of real estate projects in Vietnam would also be developed by Viet Kieu.

Nguyen, however, said the market also provided a number of hurdles. These were that real estate liquidity in Vietnam was weak compared to China and Malaysia, that real estate financing for Viet Kieu from local banks did not exist and legal frameworks for buying and selling still had many difficulties.

Hoa agreed with Nguyen, adding that the biggest difficulties for Viet Kieu when investing in Vietnam were the complicated procedures in the real estate field, and incentives changed in every locality.

A number of Viet Kieu have invested in the real estate market in Vietnam. The Minh Viet Investment Joint Stock Company recently bought into the franchise of a famous foreign company to use its trademark to invest in Vietnam’s real estate market.

The company had previously invested in projects in Hanoi, Ho Chi Minh City and the northern province of Quang Ninh.

At the end of 2009, the director of Binh Thien An Joint Stock Company, Viet Kieu Trinh Thanh Huy announced that his company was looking to pour hundreds of millions of dollars into the real estate market in Ho Chi Minh City .

Binh Thien An is currently involved with Diamond Island in Ho Chi Minh City and it plans to start another real estate project in Hoi An.

Currently, around four million Vietnamese people are living in foreign countries and territories. Every year about 500,000 Viet Kieu come back Vietnam to invest and set up their businesses.

According to the State Committee on Overseas Vietnamese, currently more than 3,200 Viet Kieu are involved in enterprises in different fields in Vietnam, with total investment capital of $5.7 billion.

It was expected that this capital investment would reach roughly  $8 billion during 2010 and 2011.