Vietnam property developers need to optimize cheap foreign capital sources: expert

Vietnam’s real estate companies should unleash capital sources by tapping into cheap foreign capital sources, restore market confidence, and remove barriers facing the bond market, said experts on Tuesday.

At a seminar themed “Identifying financial flows into the real estate market" in Hanoi, Nguyen Quoc Hiep, chairman of GP Invest - one of Vietnam's most prominent property developers, said property firms need to make good use of foreign capital sources as they are quite cheap now.

“It is necessary to restore investor confidence in corporate bonds,” he said, adding that competent agencies need to devise a land valuation plan for localities to apply, while shortening the credit access process for businesses.

According to Vu Van Thanh, chairman and CEO of another real estate developer VNGroup, many legal regulations remain unclear and prove difficult to apply.

“It is very difficult to unleash financial flows for the realty market at present because people have lost confidence in real estate and businesses are facing cash flow congestion and cannot prove their incomes to repay debt,” he said.

Regarding solutions, Thanh noted that related laws should be urgently promulgated.

It is necessary to ensure consistency between what businesses say and what they do in order to regain people’s confidence in the market, he stressed.

Finally, Thanh emphasized the need to fix the fear of taking responsibility among state employees or acts that cause difficulties for businesses regarding administrative procedures.

At the seminar, Dr. Ngo Cong Thanh, a former official from the Ministry of Planning and Investment, said that since the 1987 Foreign Investment Law was introduced, Vietnam has attracted more than 37,500 FDI projects with a total registered capital of nearly $460 billion. $69 billion or 15% was poured into real estate, making it the second largest FDI recipient, after the manufacturing and processing industry.

According to Thanh, FDI has been a great resource for the development of Vietnam's real estate market as well as a new style urban development. It has also led to competitiveness, prompting Vietnamese businesses to develop quality projects.

Before 2007, FDI ran into three real estate segments, namely office buildings and urban areas, industrial park infrastructure, and hotels.

But since 2007, foreign capital has only flowed into industrial park infrastructure and hotels, while urban areas have not attracted much FDI, he noted.

“Therefore, in order to unleash capital flows into the real estate sector, it is necessary to mobilize resources and focus on fixing the land valuation issue,” he said.