When the number of projects from foreign investors increased, real estate supply will be diversified. It makes Vietnam property market vibrant with competitive prices and buyers will have more choices.
The latest figures from Foreign Investment Department (Ministry of Planning and Investment) shows that, among sectors attracting foreign direct investment (FDI), real estate ranks the second. In which, 32 newly-registered projects with a total additional capital of nearly $1.3 billion, accounting for 7.3% of the total registered capital. Besides, many other cash flows are also poured into real estate such as transactions through the stock exchange, increasing credit. According to experts, it will positively impact and gradually pull the market to recovery.
More demand and supply for property
According to Mr. Nguyen Hoang Minh- Deputy Director of the State Bank of Vietnam (SBV) in HCMC, forex is poured into two sectors: real estate and manufacturing business. This positive sign shows that real estate is thriving. Up to now, real estate credit in HCMC account for 13% of total loans. At the same time, remittances grossed by HCMC ($ 4.4 billion) mainly pours into some sectors, including real estate.
Mr Do Hoang Duong- Deputy Director of Five Stars Group said, increasing foreign investments into Vietnam proves that many foreign investors see opportunities and potentials of our country's real estate market. For example, recently, at many apartment projects in District 7, HCMC, buyers have lined up for a chance to own apartments in beautiful location despite high prices.
Customers visit a model apartment (Photo: Quang Huy)
According to his analysis, with draft amendments to Housing Law approved by the National Assembly, effective in July 2015, foreigners can buy and own houses in Vietnam (currently, there are several hundred thousand of foreigners in Vietnam). Their demand for houses is quite huge. Premium segment will attract foreigners and then positively impact on medium class segment.
Concurring with this viewpoint, Mr Le Hoang Chau- President of HCMC Real Estate Association said, businesses are very excited about the new law. This policy will continue to boost foreigner capital flow into real estate market. When stimulating housing demand of foreigners in Vietnam and overseas who are planning to work in Vietnam, many projects will be formed and accelerated. Therefore, the increasing supply will push up demand to rise.
Besides, foreigners will participate in real estate business in Vietnam, said Mr. Chau. They can buy houses and then resell. Recent policies shows that, rights of foreigners purchasing property in Vietnam is protected. This makes foreign investors change their look of Vietnam real estate market. In the future, foreign capital is expected to continue to flow into the property market.
Experts said the property is going back to its real value. Interest rate is also more incentive for homebuyers. In particular, there are some preferential policies on foreign exchange such as recipients of remittances are not forced to sell foreign currency to banks, non-taxable income. These has stimulated foreign exchange inflows to Vietnam.
Homebuyers will benefit
In fact, there is some concern that while increasing investment, foreign investors will control the market and push price up. But Mr Le Hoang Chau confirmed, it will not happen.
According to Mr Chau, the participation of foreign investors in Vietnam real estate market is tightly controlled by Goverment. Currently, beside luxury segment, property investors from Japan, South Korea ... also invest to segments for low-income people. Projects from foreign investors will diversify supply, create more competitive price, vibrant market and more choices for buyers.
A representative of Hung Thinh Land Company said, cooperation with foreign investors also helps Vietnam real estate firms raise capital to complete the comprehensive solution for real estate projects. Enterprises will build a connection from contractors, designers, suppliers to marketing units for each project. Many costs will be cut down, the product will also be stable at a reasonable and competitive price.