A view of the Trung Hoa - Nhan Chinh Urban Area in Ha Noi. With new regulations allowing overseas Vietnamese to purchase property, remittances into the real estate sector are expected to rise. — VNA/VNS Photo Bui Tuong

HA NOI (Biz Hub) — Viet Nam is expected to see rising remittances enter the property market, following the amended housing law that allows Viet Kieu (overseas Vietnamese) to own a house in the country.

The amended law, which takes effect on July 1, 2015, will allow those Vietnamese people residing in foreign countries who are allowed to enter Viet Nam, to own houses in the country. The law does not impose any limits on the number of houses or kinds of houses they might own.

In addition, foreigners allowed to enter Viet Nam can also own houses. Foreign individuals and organisations can invest in building houses for giving them on rent.

The new regulations for overseas Vietnamese and foreigners who want to buy houses in the country are more flexible in comparison with the previous regulations, which were so tight that only a little more than 400 overseas Vietnamese and foreigners have managed to buy houses in the country since 2009.

According to Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM), the flexible regulations will attract more remittances into the property sector.

Estimates show that about US$1.5 billion of a total $12-billion of remittances into Viet Nam was used for buying houses and land last year.

Thanh said that the figure will rise in the coming years, when the amended law comes into force.

A research conducted by CIEM and Western Union at the end of last year in seven provinces and cities that receive huge remittances, showed that 30 per cent of the receivers put the money in deposits; 27 to 30 per cent invested the funds in production and services; 20 per cent bought gold; and 16 to 17 per cent bought land and houses.

Luring foreign investors

Experts also said that the amended law will make Viet Nam's property market more appealing to foreigners living and working in the country, and those who desire to invest in its property market.

Richard Leech, executive director of CBRE Viet Nam, was quoted by Dau Tu (Investment) newspaper as saying that the relaxation of regulations marked an important step in widening the door of the property market to foreign investors.

He added that the only two limitations that remain are foreigners are not allowed to own a house for a period exceeding 50 years and the percentage of apartments foreigners can own in a building or an area has been capped.

Leech did not expect any immediate impact of the new law, but said that the housing market will gradually improve.

An increasing number of foreigners are expected to participate in the property market this year, as opportunities are large with the market recovering after having allegedly hit rock-bottom levels. — VNS