Asian Holding CEO embraces Warren Buffett's investment advice

How do you evaluate the realty market and the situations developers faced in southern Vietnam in 2022 amid tightened credit policies?

Like most real estate firms in southern Vietnam, Asian Holding was doing well until the end of the second quarter of 2022. When the third quarter began, the market and firms were strongly affected due to tightened credit. At that time cash flow was like a blood clot in the body which could cause a stroke.

Credit was tightened, companies saw limited access to capital, and cash flow was practically frozen. For Asian Holding, we just saw cash outflows, not inflows. Our profit dropped to about one-fifth of when business was good.

Due to tightened credit, banks had to say no to borrowers, even those with large assets. The market in 2022 was very different from that in 2011 and 2012. At that time, although capital costs were very high, enterprises and buyers could get access to bank loans.

What were the other problems facing realty companies?

The other problems were redundancies and sales staff quitting.

At Asian Holding, an average salesman sells 12 homes a month during normal periods. But over the last two months, there have been almost no transactions. For sales teams, the basic salary is just enough to cover daily life; commission from trading accounts for a larger part of their incomes. The recent tough time forced many of them to quit, even those who were well trained.

As a result, we had to train new employees to help them master our business vision and mission. I have been in the real estate sector for 13 or 14 years, and witnessed lots of ups and downs. During tough periods, I focus on training to improve employees’ knowledge and attitudes. If you want to succeed, this is the time for you to learn about the market, to be brave enough to improve your level, as with knowledge comes money.

Another difficulty was businesses did not come up with new projects, they just focused on clearing stock. Most enterprises are suffering losses because they have been unable to sell their products. Since last October, their revenue has been very low.

Asian Holding, not a big enterprise, did not downsize or seek to clear stock. At the same time, we sought to find new ways to approach customers, researched their behavior, and focused on communications and marketing. We maintained our activities despite the difficulties and the lack of new projects.

It’s said that "no pain, no gain", and a tough market also brings opportunities. What do you think?

My duty is to make money for my followers, not just for myself. In addition to staff training and helping employees understand the value of money, my company is still hunting for land and eyeing acquisitions when we find something suitable.

Many of my friends have told me to take caution. But I like a saying by famous investor Warren Buffett, which is “Be greedy when others are fearful”. When people are fearful, it’s time to buy. This is similar to investing in the stock market: when everybody rushes to sell, you should buy instead of selling like them.

What is your forecast for 2023?

The market improved somewhat in November and December last year as the ogvernment stabilized the macroeconomic situation. In December, the State Bank of Vietnam increased its credit growth caps for banks by 1.5-2 percentage points, and the market started to see some attention again.

I also think that when banks’ deposit rates are 11% to 12% per annum, putting money into real estate investment or other industries may bring better yields.

I expect that from April to June 2023, the market will gradually stabilize and trading will return in the last four months of the year, and then banks will reach their credit supply caps.

I think that as real estate contributes greatly to the country’s GDP, business will return. Therefore, the market is expected to be completely stable in 2024 because the government wants a healthy market, not an overheated one.

In trading, I think segments that can meet market needs will go well, such as houses with prices around VND2 billion ($85,000) each, or residential land plots priced at VND1.5 billion ($63,900) because there is a real demand for them.

The social housing segment will also be good. The high-end segments will continue to see difficulties for a few years.

As for companies, they will continue to face difficulties in cash flow and personnel issues.

As for Asian Holding, we will continue to carry out our projects in Binh Phuoc province and Lam Dong province’s Bao Loc town. At the same time, we’re looking for new opportunities in areas within a maximum distance of 150 km from HCMC.