Overseas remittance flowing into real estate sector

Up to 52 percent of overseas remittance volume has flow into the real estate sector, according to the survey of National Finance Supervision Committee.

The information was given by Dr Le Xuan Nghia, the committee’s vice chair, at the conference titled “Impacts of the real estate market on financial market” on August 18.

The survey result showed that 52 percent of 4,000 households receiving overseas remittance invested in real estate and the remainder preferred sending as deposits or for consumption. The volume is increasing while FDI in the field is decreasing. FDI commitment for real estate market has tumbed from $26.6 billion in 2008 to $6.84 billion in 2010, and $305 million only in first half of 2011.

Dr Le Xuan Nghia said, by late June, total property loans of credit institutions were 245 trillion dong, equalling to 10 percent of total outstanding loans for the economy, in which the property bad debts accounted for 3 percent.

Especially, the debts Group 5 [credit institutions may lose capital] took up 40 percent of the property loans. The credit for real estate market mainly is provided in HCM City and Hanoi with respective ratio of 45 percent and 18 percent of total property outstanding loans.

Risks of real estate market on the banking system are stil there because the country’s property outstanding loans are equal to 10 percent (of total figure) against average ratio of 6-7 percent in the southeast Asia region, the doctor noted.

Moreover, the risks are gathered in small banks whose shareholders are mostly owners of real estate projects.

 

Category: Finance