Real estate developers have put a high hope on kieu hoi as their source of capital, and they have every reason to do that. Vietnam has been considered as one of the countries that receive high amounts of kieu hoi in comparison with other developing countries.
Kieu hoi is the money sent by overseas Vietnamese to their relatives in Vietnam to help the relatives improve their lives and have capital to do business.
Analysts think that those, who receive kieu hoi, would not inject their money in the stock market since the stock prices have been decreasing dramatically, and they would not make deposits, when the interest rates have become less attractive (the State Bank of Vietnam has decided that the deposit interest rate must not be higher than 14 percent per annum). Therefore, they may consider injecting money in the real estate market.
The precious money
According to the State Bank of Vietnam, though the world’s economy is in big difficulties, the volume of kieu hoi to be remitted to Vietnam this year would still increase significantly. The volume of kieu hoi in the first three quarters of the year still reached 2.5 billion dollars for each. Meanwhile, it is expected that the total amount of kieu hoi may reach 8.5 billion dollars this year, or 500 million dollars higher than that of 2010.
The reports by the World Bank and Western Union in Asia Pacific region released in late November also showed that with 4 million overseas Vietnamese living and working in 101 countries, Vietnam has been listed among the top 10 of kieu hoi receivers.
A recent survey conducted by the National Finance Supervision Council shows that 52 percent of the 4000 households that received kieu hoi, used the money to invest in the real estate sector. Meanwhile, the remaining used the money to deposit at banks and spend for their daily lives.
The survey of the council has also pointed out that the volume of kieu hoi injected in the real estate sector has been increasing rapidly.
It is a habit of Vietnamese people that they try to buy new houses or upgrade their houses at the end of the year in order to prepare for the Tet celebration. Therefore, it is reasonable to think that it is now the time for kieu hoi receivers to use the money to buy new houses and apartments, or invest in new real estate projects.
Director of a real estate trading floor on Nguyen Phong Sac Street in Hanoi also said at kieu hoi season is the time when real estate trading floors most expect, because it is the time when products can be sold most easily.
Real estate developers told not to feel happy too soon
The report of the World Bank has also pointed out that 90 percent of the kieu hoi volume has been flowing to the rural areas, where most of overseas workers’ relatives live.
Therefore, according to Vu Tuan Hung, Director of Thinh Phat Construction Company, the real estate developers in big cities may not get benefit from the kieu hoi season.
Hung said that a big percentage of the kieu hoi would be used by kieu hoi receivers to pay debts (Vietnamese overseas workers, the poor people, had to borrow money to fulfill the procedures for going working abroad), while the remaining money would be spent on upgrading houses and buying things for Tet celebration.
Source: TBKTVN
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