VietKieu are beginning to see their homeland as a better bet for their money than their adopted homes, just 6 weeks following enactment of new legislation.
VietKieu (a term meaning “Vietnamese sojourner”) from Western countries are being pulled back not by sentiment – but by promises of substantial returns.
Mrs. Hoang is one such VietKieu. Living and working in the UK has helped her generate capital, but investment prospects in England remain minimal: “I decided to buy this villa because of savings interest of 1.5% per year in England is too low, even without additional taxes of 20%. While I buy villas in Vietnam and I am in commitment from developer the profitability of 8% in US Dollar, much better than”.
The Villa she bought in PhuocTinh, Baria-Vungtau Province has an ocean view, and at for $230.000 represents a fraction of the cost of a similar property in England. Her investment is a direct result of the law change which came into force on July 1st 2015. The law now protects VietKieu enabling them to buy property in their own name, with a lower threshold of ‘proof’ required of Vietnamese heritage.
She is far from alone in responding quickly to the changes.
Oceanami villa resort project in Vungtau price from $175.000
A group of VietKieu based in Eastern Europe recently registered 7 sea-facing villas in Bai Dai, Phu Quoc. “In Phu Quoc, many developers strongly commit to high returns thanks to growing demand and infrastructure development on the island”, said Mrs Thuong, who represented the group. “The new law made it even more attractive to us to get on board early.”
It’s not only seaside views that are attracting the VietKieu. City apartments – especially at the high end – are proving noteworthy to new buyers.
Mr. Trung, was born in Vietnam 40 years ago but has lived and worked abroad for 2 decades. He recently bought a luxury apartment in the Goldview project, Ben Van Don St, Ho Chi Minh City, worths nearly 3 billion VND ($140.000).
He took his decision in July, attracted by the promises of high ROI. “I’m likely to make a profit in the longer term through value alone”, he said “but in the interim, I can still generate a 6% return through rental. It’s very good deal”.
The Sun Avenue apartment, hot project of Novaland in District 2
Novaland, one of the bigger developers of Vietnam, released a report in 2015 claiming VietKieu accounted for 10% of all new sales, with contracts being exclusively pursued in the high-end luxury segment. The Phu My Hung Company meanwhile recorded more than 100 transactions from Vietnamese overseas, though figures may be even higher:
“Before this law change, VietKieu often bought in the name of a relative. With the new real estate law extend for foreigners and Vietkieu, transactions under their name will significant raise in the near future”, said Mr. Truong Quoc Hung, adding: “Phu My Hung is a new part of Ho Chi Minh City, so we have a good idea of who has been living here. We’ve recorded a number of nearly 30.000 residents and 50% of them are foreigner and VietKieu. The law change makes these numbers even more compelling.
It isn’t just Western money that VietKieus are bringing back. Many emigrants based Hong Kong and South Korea have been buying up property at the City Gate projects on Vo Van Kiet, Ho Chi Minh City, at prices of 1 to 1.2 billion VND ($55.000), or 16 to 18 million per square meter. The law change means at this project the current number of 20% VietKieu ownership already recorded could rise even more quickly in the near future.
Mr. Nguyen Xuan Loc, director of Techcomreal said: “There’s no doubt that the policy change from the Government has been hugely influential. It solidifies the notion that foreigners bring profit just as much as native transactions, and has created many new customers, particularly in Villa Resorts, Luxury apartments and offices, particularly in Districts 2, 7 and 9.”
The common feature of this type of asset is the ability of creating return (rental and residential). Mr. Loc said that there are three reasons for Vietkieu to come back to mother country and buy property this time.
The first one is the local attractiveness of real estate in Vietnam, which is in the post-crisis phase and has just entered a new stage of recovery. Currently, the market is growing with a young population and excellent economic prospects, meaning in financial terms, it’s a good place to put their money.
The second reason is the reassurance from the government regarding the legality of their ownership. It makes the market more transparent, meaning a greater level of clarity regarding overall market prospects.
Estella Heights of Keppel Land Singapore
The last, but not least is timing: the legislation coincides with the arrival of newly successful entrepreneurs returning home from United States, Eastern Europe and some Asian countries. Many young Vietkieu investors are coming to Vietnam and invest in good location apartment and luxury apartment purely as an asset for a return. The previous generation are buying in resorts to make new homes on their return to the motherland.
Not even 2 months have passed on the enactment of the new law, and much significant data is yet to filter through, but things are already looking very positive.
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Compiled from VnExpress