|A corner of a low income housing and apartments project. Viet Nam's social and economic factors are supporting the growth of its real estate market, says consulting firm Savills Vietnam. — Photo vietq.vn
HCM CITY (VNS)— Viet Nam's social and economic factors are supporting the growth of its real estate market, which has bottomed out, an executive at property consulting firm Savills Vietnam has said.
Managing director Neal Macgregor told a press briefing on the HCM City property market over the past 20 years that 17 – 20 per cent of remittances flowing into the country went into direct property investment.
"Viet Nam is in the top 10 foreign remittance recipients globally, with last year's figure at around US$12.5 billion. This is up from less than $2 billion in 2000.
"The quantitative easing throughout the region will benefit the respective domestic economies and also encourage foreign investment into other regional targets."
Recently outward flow of capital had accelerated, noticeably from Singapore, Korea, and Japan.
The amended Law on Housing effective from July 1, 2015, which would enable overseas Vietnamese and foreigners to own houses in the country, was expected to attract a new wave of investment.
Singaporeans had shown interest, especially in projects developed by companies from their country.
Viet Nam's coastline could quickly draw foreign investors, with residential products of international standards and oriented towards foreign purchasers already being available.
"Viet Nam's current [lending] interest rate is around 9 per cent, however this low cost of debt has only recently emerged.
"In 1995 it was around 20 per cent."
The low rate was helping revive the market.
The shrinking of household size from an average of 4.7 people in 1995 to 3.6 last year had increased demand for housing.
"As younger people gain greater independence, there has been a gradual erosion of the three-generation household, the effect has been to fuel residential apartment development."
The country's urbanisation rate, from less than 20 per cent in 1995 to 34 per cent last year and its rapidly growing middle class — expected to reach 33 million by 2020 from 12 million in 2012 — were positive factors for the property market. — VNS