Remittances revive real estate

The real estate sector in Ho Chi Minh City has seen a steady revival as it received one-fifth of incoming remittances
-Photo: Le Toan

According to reports by the State Bank of Vietnam (SBV), banks in Ho Chi Minh City have received $4.76 billion in remittances over the past eleven months. This figure is expected to reach $5.5 billion after the upcoming Lunar New Year.

“Our statistics show that 21.6 per cent of remittances in 2015 have been spent on real estate projects, equalling a 0.8 per cent increase year-on-year. With the $5.5 billion forecast, we expect to see at least $1.2 billion of overseas money flowing into the property sector,” said Nguyen Hoang Minh, deputy head of the SBV’s Ho Chi Minh City branch.

Minh noted that this percentage was still small compared to the heyday of real estate in 2011, when realty accounted for a staggering 42 per cent of remittances. He recalled that after this frenzy cooled down, the property market suffered from a supply glut and its appeal to remittances’ owners was dampened. However, as the industry slowly recovered in 2015, Vietnamese citizens have once again invested their remittances in realty projects.

Economics expert Nguyen Tri Hieu was also upbeat about the flow of overseas money into real estate. According to Hieu, there is a trend among Vietnamese people living abroad to purchase homes in Vietnam as the year draws to a close, thus prompting a higher property demand at this time. Many locals now also regard real estate as an attractive investment channel and use remittances as their capital.

Vo Kim Khanh, a Ho Chi Minh City resident living in Phu Nhuan district, agreed with this observation. For the past ten years, Khanh has received monthly remittances from her two sons who are working in France, and a daughter living in the US.

“In the past, I used to invest some of my remittances in a Vung Tau-based housing project and unfortunately, I made a great loss when the market collapsed. Afterwards, scared of wasting more of my children’s money, I shied away from any property investments,” Khanh told VIR.

However, as the property sector warms up again in 2016, Khanh revealed that she would consider returning to the realty market. This time, however, she will be more careful when selecting projects to invest in.

According to the latest reports by the Ministry of Construction, there were 1,650 successful property deals in Ho Chi Minh City last December – a 20 per cent rise year-on-year. For the whole year of 2015, the city recorded 18,700 completed transactions, equivalent to an 82 per cent increase compared to 2014.