Expectation of an influx of foreign money
The revised Law on Housing, which came into effect on July 1, 2015, makes it much easier for foreigners to purchase and use residential property. The number of condominiums owned by foreign organisations and foreign individuals shall not exceed 30% of the total number of condominiums in one single condominium building. According to the Ministry of Construction’s draft of a decree providingguidelinesfor implementing the revised Law on Housing, foreigners are eligible to extend the duration of owning a house for an additional 50 years after the expiry of the first 50 year-ownership certificate. With these changes, many hope that the influx of foreign money will invigorate Vietnam’s property market and help it to further mature.
According to Dr. Le Chi Hieu, Deputy Chairman of Ho Chi Minh City’s Real Estate Association, the revised Law on Housing expands thesubjectsand conditions for owning houses in Vietnam, including foreigners who are legally permitted to live and work in Vietnam. “These positive changes have contributed to stimulating the real estate market, attracting more foreigninvestmentin Vietnam and solving issues related to capital orinventoryvolume in the market,” said Hieu.
It is impossible not to mention the annually increasing amount of overseas remittances to Vietnam, another factor that has had an influence on the real estate market in recent years. Therefore, it is believed that the changes to the law, which provide favourable conditions for foreigners to invest in the real estate sector, were given on time to wait for this currency influx.
According to an expert from VinaCapital Vietnam Opportunity Fund Ltd, besides purchasing houses for residential use, those for rent are far more attractive when compared with other investments because it promises to bring investors a potential and suitable income. Therefore, the house releasing market will strongly develop, contributing to the overall development of the real estate market.
On the other hand, in recent years the transparent and open credit policies have facilitated enterprises to proactively connect with banks to have loanpackages with a range of a flexible duration and interest features, supporting home buyers. 80% of home buyers are estimated to have demand for bankloans so the banks and investors now provide customers with longer-term loans with a flexible payment period and competitive interest which triggers people’s housing needs.
Enterprises operate more professionally
The revised Law on Real Estate Business sets out a new legal capital threshold of 20 billion dong for all real estate enterprises. The investors that carry out a residential housing development project must invest (using their own capital) at least 20% of the totalinvestment capital of any project that uses less than 20ha of land. That decreases to 15% of the totalinvestment capital for a project that uses 20ha or more land. This helps eliminate inefficient enterprises and limit the illegally mobilized capital of enterprises that took place in the real estate market.
According to Dr. Le Chi Hieu, the rather high level of capital helps facilitate investors who have financial capacity in the real estate sector and eliminate those who “win by nothing”.
Tran Ngoc Quang, Acting General Secretary of the Vietnam Real Estate Association, said that the revised Law on Real Estate Business with many new provisions in project transfer stimulates the sale and purchase of projects. However, to wait for this trend, real estate enterprises must change and overcome shortcomings in financial potential, management ability and human resources.
Earlier, Decree 61/NQ-CP issued by the Government to supplement Decree No.2 on some resolutions to remove obstacles for production and trade enterprises, support the market and resolve bad debts also had positive impacts on the market. All enterprises, who operated ineffectively, lacked experiences and capital or had mercenary activities, were gradually excluded from the playground. The rest became more professional.
In recent years, the enterprises have adjusted their commodity structures and quality. Many enterprises strive to implement the construction of projects and give out a flexible paymentmethodsuch as home buyers need to pay only 30-50% of the total value of a hand-over apartment and the rest can be paid within the following 1-3 years, even without interest.
Thus, with these new laws, the real estate market is on the right path and promises to develop sustainably in the future.
Source: vietnambreakingnews
Key words: New Laws, Stimulate, the Real Estate Market
