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In the past seven months, the volume of overseas remittances poured into property accounted for 21.8% of total remittances to HCM City, according to official statistics.
Many argue that the capital flow was far too concentrated in real estate, neglecting other channels of financial investment. The cause, they said, was the open-door policy that allows foreigners to own and purchase houses in Vietnam.
"From my own analysis, from now till the end of 2015, the domestic real estate market will be getting hot because foreign capital flowing into the market is quite huge. In particular, at the end of the year, the community of overseas Vietnamese who want to buy houses in big cities will be very high," said Dr. Nguyen Tri Hieu.
There are about 500,000 to 1 million overseas Vietnamese who want to return to Vietnam to live in retirement. Meanwhile, house prices in Vietnam are relatively cheap compared to other cities in Southeast Asia.
In addition, the income of Vietnamese living abroad has risen, and they want to invest in housing in the homeland. This can be a big opportunity for the domestic real estate market, combined with new regulations that allow foreigners to own houses in Vietnam for the long term.
However, this capital inflow is still stuck at the market "entrance", as the circulars guiding the implementation of the new Housing Law have not been issued.
Many experts said the market was not really "hot", although local firms are implementing new business strategies.
Due to the lack of guidelines, both foreigners and overseas Vietnamese are still reluctant to buy a home in Vietnam. They still ask their relatives in Vietnam to purchase houses for them.
Dr. Dinh The Hien said: "Overseas Vietnamese want to buy houses in Vietnam. However, we are implementing the priority policy for this subject in the direction of 'opening gradually' and the policy is not really stable. Currently, the law on real estate for Vietnamese people is very strict. So if we further tighten rules on foreigners, we will not be able to attract this large financial resource."
In addition to the knots in policy issues, the real estate market of Vietnam is not appreciated for its attractiveness index. The market now lacks the biggest tool in creating safety for foreign housing buyers, particularly the absence of guarantees for real estate private ownership, as some countries do.
Mr. Nguyen Van Duc, deputy chairman of the HCM City Real Estate Association, said: "The safety and peace of mind for customers must be enhanced. I have not seen any Vietnamese enterprises creating a good after-sales policy. If this issue is fixed, we can enhance the value of the payback index. Foreigners would really participate in the market."
Duc also said that many investment companies and overseas Vietnamese are eyeing the Vietnam real estate market by trying to buy wholesale a whole housing project or individual houses. However, the procedure is still confusing, so they have given up and are continuing to wait for guidance.
The five large knots for foreigners to buy houses in Vietnam:
- Slow implementation of documents guiding the implementation of the Housing Law 2014.
- The administrative procedures have not been simplified yet
- Provisions on protection of the interests of investors of real estate projects who are overseas Vietnamese are not yet available.
- The provisions on housing trade in Vietnam have not been translated into many foreign languages.
- The methods of payment are inflexible. Foreigners can only transfer money to Vietnam to buy a house but are not allowed to transfer money abroad after they sell or transfer their houses in Vietnam. They also are not permitted to borrow from banks in Vietnam to purchase houses.
Foreigners can buy, sell houses only through banks
Foreigners buying or selling houses in Vietnam are required to carry out the transactions through banks in Viet Nam and not in cash, the central bank has decreed.
Foreigners are required to buy or sell houses in Vietnam via local banks.
They can get mortgages if they meet banks' requirements, the State Bank of Viet Nam (SBV) said further in a document it has issued to guide the buying and selling of
houses by foreign individuals and organisations.
The tenor of the loans cannot exceed the time they live and work in Viet Nam, while for organisations and other legal entities, it will not exceed their licence period.
Amendments to the Housing Law that took effect on July 1 permit foreigners and overseas Vietnamese to buy housing if they have a visa to enter the country.
They can buy, lease out, gift, and inherit property.
There are a few restrictions, one of which is that combined foreign ownership should not exceed 30 percent of an apartment project.