Want to be in the loop?
subscribe to
our notification
Business News
EXTRA CREDIT ROOM SUGGESTED FOR REAL ESTATE SECTOR
Real estate developers have suggested that the State Bank of Vietnam increases credit room soon to inject capital into the economy and create conditions for property businesses to restructure and develop this year.
Nguyen Van Dinh, deputy chairman of the Vietnam Real Estate Association, said that to avoid market crashes, the central bank (SBV) must quickly increase credit to give the economy a boost in capital.
“Based on this credit easing, developers will have finance sources to continue their projects and buyers and investors will have capital for products,” Dinh said.
However, he stressed that the cash flow injected into the market needs to be controlled to target the right product segments, bringing the residential real estate price down to a more comfortable level for households with real needs.
“For real estate businesses in difficulty, the SBV should create conditions for businesses to postpone due loans, similar to what we saw during the pandemic,” he said.
If businesses with overdue credit loans are moved to worse debts, Dinh suggested that the SBV consider restructuring their debts, so they can access new credit loans and get through this extremely difficult time.
“At the same time, banks should not apply new interest rates to old loans, and even offer interest-free support or preferential loans for investors and developers of affordable housing and social housing for workers and people on low-incomes,” Dinh said. “For businesses that have issued corporate bonds to maturity, banks need to support underwriting or buying back the issued bonds.”
Economic expert Can Van Luc said the government needs urgent solutions to solve the four biggest difficulties in the current real estate market: legality, capital, supply-demand balance, and official plans.
Luc said it was key to remove legal blockages for stuck projects so that the supply can be increased. “Regarding capital for real estate, the credit growth of 25 per cent is not too low, but it needs to be easier for developers to access credit because capital mobilised from the stock market and bonds is now stagnant, putting many developers in an extremely difficult situation,” Luc said.
“I think that the SBV should proactively grant credit lines now. More importantly, it is necessary to remove the bond bottleneck with the revision of legislation so that businesses with good health can still issue bonds successfully, to have a powerful finance flow into the market,”
Moreover, Luc noted that real estate businesses also needed drastic solutions in restructuring, paying bonds, negotiating with bondholders to extend debt, and even exchanging bonds for real estate products.
According to Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), 2023 is the year to decide real estate businesses’ fate.
The HoREA on February 8 sent a document to the SBV, proposing to allow real estate businesses to restructure their due credit loans, maintain the outstanding debt and get new credit loans if they have collateral assets. Specifically, it proposed issuing a new circular allowing real estate businesses to restructure credit loans due within 12-24 months, keep their debts, and get new credit loans with collateral assets.
Regarding credit conditions, the HoREA suggested the central bank assign credit institutions not to require real estate businesses to have a construction license as a condition for considering loans.
Talking to VIR, private investor Nguyen Manh Duc said developers inevitably had to look at themselves and come up with proactive solutions.
“The macroeconomy is facing many difficulties, while real estate is only a part of the economy. To save the market, businesses must save themselves first. Enterprises need to restructure and review projects and debts to have the right direction for their development,” Duc said.
He added that at a real estate credit conference held by the SBV on February 8 focusing on issues such as access to capital, interest rates, and legal obstacles, some developers said they had nearly 50 projects ongoing at the same time.
“For those, I think the developer needs to sell some projects to other potential investors and lower their prices in others to ensure better finance flow for their development,” he said. “Loans from one project are used for others, and this is very dangerous when the market falls. It is necessary to look at reality.”
According to the General Statistics Office, the number of real estate businesses dissolved in 2022 was nearly 1,200, an annual increase of 38.7 per cent. Many businesses have had to drastically restructure investment portfolios, change business plans, cancel or postpone investment activities and project construction, scale down production, and transfer projects. Others have had to cut off staff, some by up to half, reduce wages by 30-50 per cent, and others offered little or no bonus for the Lunar New Year.
Some real estate businesses have also implemented measures such as reducing selling prices by up to half, but low demand means it has still been difficult to sell products. This has pushed them into a cash shortage, which could potentially lead to the status of holding dead assets.
Source: VIR
Related News
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.