The real estate market in Vietnam is booming thanks to remittances.
According to information previously shared with customers through articles on our blog, remittances to Vietnam have been increasing annually, surpassing milestones of $16 billion to $18 billion per year and consistently ranking among the top 10 in the world.
The continuous increase in remittances is driven by the growing investment demand from overseas Vietnamese.
This surge follows the relaxation of laws allowing overseas Vietnamese to own property in Vietnam as Vietnamese citizens.
These legislative changes were passed by the 15th National Assembly at its 6th session (November 2023) and at the extraordinary 5th session (January 18, 2024) on the rights of overseas Vietnamese under the Land Law, the Housing Law, and the Real Estate Business Law; and were disseminated and promoted during the co-organized by the State Committee for Overseas Vietnamese (Ministry of Foreign Affairs), the National Assembly’s Economic Committee, the Ministry of Construction, and the Ministry of Natural Resources and Environment on March 26, 2024 conference.
So how do remittances impact the real estate market in Vietnam? Let's explore this issue further with FinFan in the following article.
Overview of Remittance Inflows to Vietnam
Vietnam has witnessed a significant surge in remittance inflows over the past few years, marking it as one of the top countries globally in terms of receiving remittances. These inflows have become a crucial component of the nation's economy, supporting both individual households and broader economic development.
Vietnam currently ranks in the top 10 countries receiving the largest remittances in the world. Annual remittances range from $17 to $18 billion and are expected to continue to maintain and grow in 2024.
Ho Chi Minh City is the locality receiving the largest remittance inflow, with a figure reaching $9.46 billion in 2023, a 43% increase from the previous year.
Read more:
. REMITTANCES TO VIETNAM REACH OVER 600 BILLION VND JUST DURING TET
Where Do Remittances to Vietnam Come From?
Remittances to Vietnam primarily come from countries with large Vietnamese expatriate communities and are divided into 2 sources.
The first source of remittance to Vietnam
The first source comes from the Western countries, where many Vietnamese refugees have resettled and lived since 1975.
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The United States: The United States is the largest source of remittances to Vietnam. With a substantial Vietnamese population, particularly in states like California, Texas, and Washington, Vietnamese Americans send significant amounts of money back to their families and invest in various sectors in Vietnam.
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Canada is another major contributor to Vietnam's remittance inflows. The Vietnamese community in Canada, especially in cities like Toronto, Vancouver, and Montreal, plays a crucial role in sending financial support to relatives and investing in Vietnam.
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Australia hosts a large Vietnamese community, particularly in cities such as Sydney and Melbourne. These expatriates are known for their significant contributions to remittance flows, supporting their families and engaging in investment activities in Vietnam.
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Countries in Europe, including Germany, France, and the United Kingdom, also contribute notably to the remittance inflows to Vietnam. The Vietnamese diaspora in these countries is well-established and maintains strong ties with their homeland, often sending money back for both personal and investment purposes.
Where is the second source of remittance to Vietnam?
According to the report of VOA, we have the second source of remittances to Vietnam, where the remittance amount sent to Ho Chi Minh City alone in 2023 was three times the FDI capital invested in the city in the same year.
Furthermore, more than 53% of remittances to Ho Chi Minh City come from developed Asian countries such as South Korea, Japan, Taiwan, etc.
The real estate market in Vietnam is booming thanks to remittances.
Below are excerpts from some newspapers discussing the significant development of the real estate market in Vietnam thanks to remittances:
The real estate market in Vietnam is booming in 2024, largely due to a stable and robust influx of remittances. Vietnam currently ranks in the top 10 countries with the largest remittance flows globally, with annual remittances ranging from $17 to $18 billion and projected to continue in 2024.
A significant portion of these remittances is invested in real estate, particularly residential properties, with approximately 25% of remittances flowing into this sector.
(Source: Batdongsan.com.vn).
Additionally, new policies create more favorable conditions for overseas Vietnamese (Viet Kieu) to purchase real estate in Vietnam, enhancing demand from this group.
Approximately 600,000 to 700,000 Viet Kieu are entrepreneurs and intellectuals with high qualifications looking to invest and live in Vietnam.
Property prices in Vietnam are relatively lower compared to many other countries, making real estate investment more attractive to Viet kieu and foreigners.
(Source: Một thế giới Newspaper).
Furthermore, Vietnam has become an attractive destination for international investors. In 2024, Vietnam is ranked as the second most attractive real estate market for investors in the Asia-Pacific region, only behind India.
Investors from Singapore, Japan, South Korea, and other countries actively invest in commercial and residential real estate in Vietnam.
(Source: VOH and OneHousing).
New Trends in Remittance Transfers to Vietnam from Asian Countries
In recent years, remittance transfers to Vietnam from Asian countries have shown significant growth and evolved with new trends. This shift is driven by various factors including changes in migration patterns, advancements in financial technology, and new governmental policies both in Vietnam and in the host countries.
In particular, the South Korean and Japanese markets increasingly welcome a growing number of Vietnamese labor exports each year.
According to the latest data from FinFan's market research team, remittances solely from the South Korean market have reached over 395 million USD last year, originating from three main sources: labor export, Vietnamese students studying in Korea, and Vietnamese individuals marrying and settling down in the Land of the Morning Calm.
Of particular note is that from 2017 until now, excluding the significant impact of the COVID-19 pandemic, the number of** Vietnamese laborers and students going to South Korea has been steadily increasing by nearly 10% each year**.
These two groups are also the largest senders of money back to Vietnam, with approximately $202 million and $170 million respectively in 2023.
It's favorable conditions for the fintech industry to thrive as remittances to Vietnam increase and skew younger.
The continuous increase in remittances to Vietnam in recent years, partially driven by the growing number of younger Vietnamese laborers in developed countries and Vietnamese students studying in developing Asian countries (such as South Korea), presents favorable conditions for the development of fintech related to cross-border payments to this country, as:
- Young people today have a better understanding of technology.
It can be said that the development of technology today has provided young people with various options in fashion, education, work, and more. Sending money to Vietnam is no exception.
With their eagerness to learn and the dynamic, creative nature of the young Vietnamese generation, they are always seeking "Faster - Safer - More Cost-Effective" solutions to transfer money to their loved ones or friends.
Therefore, fintech solutions related to cross-border payments that can meet these three criteria can be attractive to young generation Vietnamese users.
- The policies of the Vietnamese government increasingly encourage non-cash payments.
In recent years, the trend of non-cash payments in Vietnam has been increasingly spreading and receiving much support as well as assistance from the state's monetary policies.
For example, the Vietnamese government has implemented various measures to promote non-cash payments. These initiatives include the development of robust digital infrastructure, the introduction of supportive regulations, and campaigns to raise awareness about the benefits of electronic payments.
Read more:
- Opportunities to Develop Financial Investment Products for Customers Sending Remittances to Vietnam
Beyond real estate investment, smaller remittance amounts (around 1000-2000 USD per month) from students or labor export workers can also be utilized for financial market investments such as savings, stocks, mutual funds, peer-to-peer lending, insurance, etc.
This allows them to build a solid financial foundation by the time they return home and begin pursuing their personal aspirations.
Conclusion about The Real Estate Market in Vietnam is Booming Thanks to Remittances
In conclusion, the real estate market in Vietnam is experiencing a significant boom, largely driven by substantial remittance inflows.
This influx of funds from Vietnamese expatriates and overseas workers has provided a steady and robust source of capital, enabling considerable investment in residential and commercial properties.
With continued support from government policies and the increasing trend of non-cash payments, the momentum in the real estate sector is likely to be sustained, contributing to the country's economic growth and development.
Moreover, the continuous increase in remittances to Vietnam over the years has also created favorable conditions for fintech companies to further develop.
This growth extends beyond cross-border money transfers to other areas such as financial investments, business development, and more within the Vietnamese market.
This article was curated and authored by FinFan's market research and development team, alongside our marketing department.
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