2023 a decisive year for real estate businesses: expert

By Vu Pham, Huong Dung
Tue, February 14, 2023 | 3:47 pm GMT+7

This year will be a decisive year for realty businesses, hence synchronous solutions regarding legal institutions, administrative procedures and the capital market are critical, said Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association.

Rescheduling bank debts

2022 was an especially difficult year for the real estate market and businesses, Chau said, noting that many developers had to downsize their operational scale, stop or postpone investment activities, project implementation and initial public offerings (IPOs).

In addition, many were forced to cut staff, with some laying off 50% of employees, reduce salaries by 30-50%, and cancel Lunar New Year (Tet) bonuses, the association (HoREA) chairman added.

Besides, many developers were unable to sell their products despite offering discounts of up to 50%, resulting in a serious capital shortage.

To deal with the situation, the HoREA has asked the State Bank of Vietnam to allow real estate businesses to reschedule their bank debts and access new loans with reasonable interest rates, providing they have collateral.

“2023 is forecast to be a decisive year for property firms, which are in urgent need of support to ensure liquidity. They need access to credit to overcome this extremely difficult period," said Chau.

An office of Khai Hung Land, a Vietnamese real estate developer. Photo by The Investor/Vu Pham.

An office of Khai Hung Land, a Vietnamese real estate developer. Photo by The Investor/Vu Pham.

Currently, besides legal problems, property developers are facing pressure from the maturity of privately placed corporate bonds and debts, which could potentially turn into bad debts, he noted.

It is estimated that about VND46,145 billion ($1.95 billion) worth of corporate bonds will mature in the first half of 2023, with a further VND64,185 billion ($2.72 billion) in the second half.

Enterprises with bad debts, even those with feasible projects and collateral, will not be able to access new loans unless the State Bank of Vietnam eases conditions, Chau said, adding that it is also difficult for homebuyers to access credit.

“Therefore, the central bank should issue a new circular allowing real estate enterprises to reschedule due debts within 12-24 months, keep debt groups unchanged, and take out new loans when they have collateral,” the HoREA chairman proposed.

Businesses folding en masse

Data from the Ministry of Planning and Investment shows that in the first month of 2023, there were 338 newly established real estate enterprises, with total registered capital of VND18,530 billion ($785 million), down 65% year-on-year. As many as 153 property companies were dissolved, an increase of 17.7% over the same period in 2022.

The number of firms returning to operation in January reached 499, down from 610 one year earlier. Those temporarily suspending business activities totaled 1,448, a year-on-year surge of 65%.

In 2022, the number of newly established businesses in the real estate industry increased 13.7% year-on-year to 8,593. However, those declaring bankruptcy and dissolution rose 38.7% over the same period in 2021 and accounted for 6.4% of the total number of dissolved businesses nationwide. Companies suspending operations soared 50.5% year-on-year.

According to property consultancy DKRA Vietnam, last year, real estate firms faced huge difficulties in accessing loans, issuing bonds and mobilizing capital from individual investors, leading to a severe shortage of capital for implementing projects. At the same time, the negative market sentiment, legal problems and high input material costs greatly affected their business activities.

This difficult situation had a significant impact on the growth of the national economy, reducing state budget revenue, it argued.

The Vietnamese real estate market in 2023 will continue to face difficulties with medium or low liquidity and no remarkable improvements in the short term, said Vo Hong Thang, R&D deputy director of DKRA Vietnam.

“This year, the market will witness the restructuring of real estate businesses and brokerage companies to adapt to new conditions. More companies would be choked out of the market,” he said.

The market will focus on housing products that meet actual demand in the affordable segment such as apartments under VND50 million ($2,130) per sq.m in Ho Chi Minh City, under VND35 million ($1,490) per sq.m in neighboring provinces, or the land lot segment. Projects must have full legal bases and clear construction schedules, with bank guarantees and loan support, Thang said.

“This year will be a difficult one for the resort real estate segment,” he added.

In 2023, in the face of market challenges, many real estate businesses said they would choose a cautious and defensive business plan to minimize risks. For example, they would reduce the amount of investment capital and lower project construction to avoid cash flow pressure. They would also prioritize reserving resources to deal with future emerging issues.

Comments (0)
  • Read More
Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Shunsin Technology (Bac Giang, Vietnam) Limited, a subsidiary of Taiwanese giant Foxconn, will invest $80 million in Vietnam’s northern province of Bac Giang to produce integrated circuits (IC).

Industries - Mon, November 4, 2024 | 10:44 am GMT+7

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Net profits of listed companies in Vietnam increased 21.6% year-on-year in the third quarter of this year, maintaining a stable growth rate since the start of this year, according to local financial data provider FiinGroup.

Finance - Mon, November 4, 2024 | 9:31 am GMT+7

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand’s Siam Cement Group (SCG) recorded a revenue of THB36.71 billion ($1.08 billion) in Vietnam in the first nine months of this year, up 14.7% year-on-year.

Companies - Mon, November 4, 2024 | 8:00 am GMT+7

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh, Party chief of Hau Giang province, was appointed by the Politburo, the country’s supreme decision-making body, to be Khanh Hoa province’s Party chief for the 2020-2025 term.

Politics - Sun, November 3, 2024 | 7:45 pm GMT+7

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand is holding talks with Russia to expedite negotiations for a free trade agreement (FTA) with the Eurasian Economic Union (EAEU).

Southeast Asia - Sun, November 3, 2024 | 7:20 pm GMT+7

Indonesia attracts foreign investment in technology sector

Indonesia attracts foreign investment in technology sector

As many as 19 Australian companies have expressed an interest in investing in Indonesia's technology sector, Communication and Digital Affairs Minister Meutya Hafid said on Thursday.

Southeast Asia - Sun, November 3, 2024 | 7:18 pm GMT+7

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Small businesses in logistics should look to use existing tools, software and technology solutions effectively, says Dinh Thanh Son, deputy CEO of Viettel Post.

Companies - Sun, November 3, 2024 | 4:30 pm GMT+7

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

AI has helped Masan Group forecast the number of items likely to be sold during peak season based on available data and to optimize product placement, says An Luong, head of the corporation’s artificial intelligence & data science division.

Companies - Sun, November 3, 2024 | 2:51 pm GMT+7

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large-scale, specialized logistics centers that will enable greater competitiveness of local economies and enterprises, says Tran Thanh Hai, deputy head of the Ministry of Industry and Trade's agency of foreign trade.

Economy - Sun, November 3, 2024 | 11:00 am GMT+7

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam’s manufacturing and sourcing sectors saw a substantial 35% year-on-year increase and a 52% quarter-on-quarter increase in Q3/2024 job orders, global workforce solutions provider Adecco said in a reseach report released Thursday.

Economy - Sun, November 3, 2024 | 9:00 am GMT+7

Construction majors to continue capitalizing on public investment projects

Construction majors to continue capitalizing on public investment projects

Vietnamese construction giants are expected to continue capitalizing on public investment projects for the remainder of this year after delivering strong performances in the third quarter, analysts say.

Companies - Sun, November 3, 2024 | 8:00 am GMT+7

Former Government Office chairman receives $7,900 bribe from property project

Former Government Office chairman receives $7,900 bribe from property project

Mai Tien Dung, former Minister-Government Office Chairman, received a bribe worth VND200 million ($7,900) from Nguyen Cao Tri, owner of the Dai Ninh eco-resort and urban area project in Lam Dong province.

Society - Sat, November 2, 2024 | 9:13 pm GMT+7

Thai food giant CP enters public-private partnership to promote food system transformation

Thai food giant CP enters public-private partnership to promote food system transformation

Thai-invested C.P. Vietnam Livestock JSC and the Partnership for Sustainable Agriculture Vietnam (PSAV) signed a memorandum of understanding Friday on working together to advance sustainable agriculture in the country.

Companies - Sat, November 2, 2024 | 7:16 pm GMT+7

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Vietnam’s central province of Quang Ngai will work with the investor to have construction of VSIP II Quang Ngai, a facility based on the Vietnam-Singapore Industrial Park (VSIP) model, begin in August 2025.

Industrial real estate - Sat, November 2, 2024 | 3:47 pm GMT+7

Vietnam likely to grow 6.5% in 2024-2025: VinaCapital

Vietnam likely to grow 6.5% in 2024-2025: VinaCapital

VinaCapital, among the biggest foreign-run asset managers in Vietnam, has forecast the country’s economy to achieve 6.5% growth in both 2024 and 2025, with the composition of the expansion to change to more domestically driven factors next year.

Economy - Sat, November 2, 2024 | 2:00 pm GMT+7

Major Vietnamese developer Novaland appoints new CEO

Major Vietnamese developer Novaland appoints new CEO

Duong Van Bac, who joined Novaland as chief financial officer in August 2023, has been appointed general director, starting Friday.

Companies - Sat, November 2, 2024 | 10:24 am GMT+7