Vietnamese Expatriates About to Gain Access to Real Estate Market

In a significant change outlined in the 2024 Land Law, which will take effect from January 1, 2025, Vietnamese expatriates will soon have expanded land use rights. This new amendment has garnered much attention, particularly due to its potential impact on the real estate market.

New Opportunities for Vietnamese Expatriates

Under the revised Article 4, both Section 3 and Section 6 of the Land Use Act, individuals who are currently using land, meet the qualifications for land use rights certification, and have ownership rights associated with the land, yet have not received the necessary certification from the government, can now access land resources from the state.

According to Troy Griffiths, the Deputy Managing Director of Savills Vietnam, this change will bring more investment opportunities for overseas Vietnamese in the real estate sector. He believes that this alteration also holds tremendous potential for the market, as direct investment from Vietnamese expatriates is now possible, eliminating the need for intermediaries and reducing unnecessary disputes. In his opinion, this new law will create a more favorable environment for investment and decrease the risk of disputes during the investment process.

A Portrait of Vietnamese Expatriate Investors

Savills, a leading real estate services provider, has had the opportunity to collaborate with many Vietnamese expatriates. One noteworthy observation is that a significant portion of this group consists of older individuals who have accumulated a certain level of wealth while working abroad. Having worked diligently for many years, they now possess substantial assets and are considering investments in Vietnam, some even contemplating a return to their homeland.

“Cũng cần lưu ý rằng có rất nhiều người Việt Nam đang làm việc ở nước ngoài, không chỉ những Việt kiều mà còn cả những người đang lao động tại nước ngoài. Điều này tạo ra một nguồn nhà đầu tư tiềm năng khổng lồ”, ông Troy phân tích.

According to the Deputy Managing Director of Savills, there are not only Vietnamese expatriates but also individuals currently working overseas who are interested in investing. This massive potential investor pool must not be overlooked.

The Importance of Remittances

The State Committee for Overseas Vietnamese reports that remittances to Vietnam since 1993 have amounted to over $190 billion by 2022, nearly equal to the disbursement of foreign direct investment during the same period. In 2022 alone, remittances reached a record $19 billion, positioning Vietnam as one of the top ten countries receiving the most remittances globally.

“Từ số liệu trên có thể thấy đây là nguồn vốn rất quan trọng đối với Việt Nam. Câu hỏi đặt ra rằng vốn đó sẽ được sử dụng như thế nào khi về đến Việt Nam? Điều này khá thú vị vì nó có sự biến động đôi chút theo tỷ giá tiền tệ. Tất nhiên, nếu được gửi từ Mỹ, đồng USD mạnh đồng nghĩa với sức mua lớn hơn ở Việt Nam. Hầu hết kiều hối đến từ các nước châu Á thông qua người lao động. Không ít nguồn tiền này đã được chảy vào các bất động sản”, ông Troy phân tích.

These statistics highlight the significant role remittances play in Vietnam’s economy. However, there is an interesting question: How will this capital be utilized upon its arrival in Vietnam? The currency exchange rate can create some fluctuations in its use. Notably, if the remittances originate from the United States, the strength of the US dollar would increase their purchasing power within Vietnam. Unsurprisingly, a considerable portion of these remittances comes from Asian countries through migrant workers, with a significant amount being invested in real estate.

The Intersection of Remittances and Real Estate

The demand for real estate investment using remittances has been noted. According to a 2016 study by the Central Institute for Economic Management Research, approximately 15-20% of remittances were directly invested in the real estate sector. These figures reveal the substantial role remittances play in shaping Vietnam’s real estate market.

In conclusion, the expanded land use rights granted to Vietnamese expatriates present new investment opportunities in the real estate sector. As overseas Vietnamese and individuals working abroad consider returning to their homeland, the influx of remittances contributes to the growth of the real estate market. Savills Vietnam remains optimistic about the potential of this evolving landscape, driven by the desire of the Vietnamese diaspora to invest in their home country. With the new legislation in place, the real estate market is set to experience significant changes that will shape the Vietnamese economy for years to come.

This article was written for Business Today, the go-to source for finance and economic insights. For more information, visit Business Today.