Closure of 1,286 businesses reflects Vietnam property market woes

As many as 1,286 real estate businesses were dissolved in 2023, a 7.7% year-on-year increase that indicates numerous difficulties facing the market, a General Statistics Office (GSO) report says.

The number of newly established property businesses, meanwhile, went down 45% year-on-year to 4,725.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS), said that in the first two quarters of 2023, the real estate market witnessed the "fall" of a series of real estate businesses. The third quarter saw some signs of improved health, but around 107 enterprises still left the market each month.

"From now until the first half of 2024, the market will continue to see the "death" of a number of exhausted real estate businesses," Dinh commented.

He said that the realty market continued to face unprecedented difficulties in 2023, with cash flow slowing down to a trickle, causing businesses, big and small, to struggle. To survive, many firms had to cut a large number of personnel and restructure their apparatus.

In November, Ho Chi Minh City-based Housing Development and Trading Joint Stock Company (HDTC) issued a notice that it was stopping operations, retaining just key personnel and letting all other employees take leave without pay as it had no source of revenue.

Similarly, Hanoi PVR Investment JSC also announced that the company and all of its branches, representative offices, and business locations have registered to halt operations from November 15, 2023 to November 14, 2024 to reorganize and find new business directions.

Another real estate developer, Dat Xanh Group, also had to cut a large number of personnel. As of September 30, the group had reduced its strength by nearly 1,300 from the beginning of the year to around 2,480 employees.

Phat Dat Real Estate Development Corporation reduced its staff strength by 100 employees to 254 as of late September, while Khang Dien Group laid off 36 people in the first nine months of 2023.

In 2023, 89,100 Vietnamese enterprises registered to temporarily suspend operations for a certain period of time, up 20.7% compared to 2022, according to the GSO. About 65,500 companies stopped operations pending dissolution procedures, a year-on-year increase of 28.9%; and 18,000 completed dissolution procedures, down 3.1%. On average, 14,400 businesses left the market every month.