Locals spend billions on realty abroad

10:18 | 30/08/2018

Vietnamese buyers spent $3 billion on homes in the US between April 2016 and March 2017, showing the interest of Vietnamese people in this segment, but also raising the question of how such large amounts of money could be transferred abroad.

locals spend billions on realty abroad
Locals spend billions on realty abroad - illustration photo, AFP Photo/FREDERIC J. BROWN

According to the US National Association of Realtors (NAR), this recently-released number propelled Vietnam into the top 10 of countries with buyers in US real estate during this one-year period.

According to Pham Do Chung Thuy, vice president and country treasurer of Bangkok Bank, the Vietnamese government has not outright banned transferring money abroad to buy homes, while detailed guidelines on how to transfer have not been released either.

“This is one of the challenges for buyers and bankers when they are involved in any case of money being transferred to buy property abroad,” Thuy said. According to her, a deal to buy property abroad is seen as an investment abroad and thus regulated by the Law on Investment, under which companies and individuals are permitted to set up an investment abroad. Bangkok Bank and other banks are using this law to support buyers.

Despite the foreseen risks of buying homes abroad, many Vietnamese people are still paying millions of dollars to buy homes in their dream countries such as the US and UK. For them, it frequently carries the purpose of a residence in addition to the purpose of an additional investment or having an accommodation for their children when they move abroad for education.

Lieu Nguyen, NAR president’s liaison to Vietnam, commented that there are ample business opportunities both with Vietnam and Vietnamese homebuyers in the US.

“Many Vietnamese people are currently investing in the San Francisco Bay area, southern California or Texas, because there are large Vietnamese communities in these locations,” said Nguyen.

Not only the US, but also properties in the region, including Thailand, are attracting rich Vietnamese homebuyers. This has prompted many foreign developers to take roadshows to Vietnam to introduce their projects to local buyers.

Just last week, Thailand-based Sansiri expanded its business to the Vietnamese market by announcing an exclusive strategic partnership with Denzell to sell their properties in Thailand to Vietnamese home-buyers.

Via Denzell, Sansiri will allow Vietnam-based clients to invest in international real estate and to easily gain access to Sansiri’s prominent projects in the most attractive destinations of Thailand such as Hua Hin, Phuket, Pattaya, Chiang Mai, and Bangkok.

According to Apichart Chutrakul, CEO of Sansiri, Vietnam is one of the most attractive overseas markets for international business. “With the rise of interest in Thai properties in the Asia Pacific region and the partnership with Denzell Vietnam, we want to build up and provide a good portfolio of projects to Vietnamese buyers,” Chutrakul said.

“The demand for homes in Vietnam is increasing, because the country now boasts the fastest-growing ultra-rich population in the world. Recent government efforts to equitise many state-owned enterprises, rapidly growing private equity investments, a 7.38 per cent year-on-year increase in GDP in the first quarter of 2018, and the presence of a range of large-scale companies like Samsung and Warburg Pincus also do their part to increase the demand,” he added.

According to Kingston Lai, CEO of Denzell Vietnam, Thailand is now considered a better option to invest due to fewer taxes, average prices starting from VND3 billion ($132,743), and great rental yields at 6 per cent per annum in Bangkok’s city centre and at 7-8 per cent per annum in holiday resort areas.

Sherri Anne Choo, a representative of Berkeley Group, told VIR on a recent trip to introduce London properties to Vietnamese home-buyers that the company is seeing stronger interest from Vietnam, especially from parents who wish to send their children to London for education and are looking to invest in properties at the same time.

“This is the main customer group for us. In Ho Chi Minh City, we are observing younger investors looking for properties with the goal of investment in capital growth and rental yields, and London offers a stable asset,” Choo said.

“We have brought along projects that have been successful for us so far due to their excellent location, especially their proximity to schools, good transport links, and safe neighbourhoods with convenient amenities that also present an investment opportunity. These are the most important factors for our Vietnamese clients,” Choo added.

Bich Ngoc

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