The Hanoitimes - Overseas remittances have been an important source of capital for the real estate sector, according to a representative of the State Bank of Vietnam (SBV).
Over the last three years, overseas remittances to Ho Chi Minh City reached nearly US$5 billion per year, one fifth of which, equivalen to US$1 billion, poured into the real estate sector, VnExpress reported.
Overseas remittances have been an important source of capital for the real estate sector, said Nguyen Hoang Minh, deputy director of the SBV-HCM City branch at a conference on the prospect of the sector on August 11.
The amount of over US$1 billion per year is a major support for property developers and contributes positively to Ho Chi Minh City's economic development in particular, and of Vietnam in general, he added.
Moreover, the credit structure of the real estate sector has been stable, according to Minh. In the first seven months this year, total outstanding loans in Ho Chi Minh City stood at VND1,128 trillion (US$48.08 billion), 75% of which went to business and production, 10.8% to real estate and 14% to consumer lending.
Although 40% of the consumer lending was put into real estate, most of them have low risks as they are backed with collateral assets. This should not be seen as a source of concern, Minh continued.
Additionally, mid- and long-term loans accounted for 53% of the city's total outstanding loans, while short-term loans were 47%.
Upon breaking down, credit for real estate contributed 10.8% of the total lending, reaching VND208 trillion (US$8.87 billion). Over the last five years, credit growth in the real estate sector is on growing trend, averaging 11% per year.
At present, the credit growth rate in this sector is increasing but at a lower rate compared to the overall credit growth rate.
After the 2008 - 2010 period, the SBV has strict regulations on minimizing risks in real estate, for which licenses will only be issued for investors with sufficient financial and management capabilities, Minh stressed.
More importantly, the Law on Real Estate Trading stipulates that the investor's financial obligations must be guaranteed by a competent commercial bank in case the investor fails to transfer the building on schedule as commitment to clients before they sell or lease purchase off-the-plan buildings.