Experts gathered yesterday at a Ha Noi conference to review real estate market investment opportunities and discuss solutions for the stagnant sector.
HA NOI —
|Unfinished villas sit idle in the capital city's Thien Duong Bao Son residential area. The property market has gone through a long downturn, throwing businesses and investors in the sector into difficulties. — VNA/VNS Photo Hoang Lam |
"Challenges faced by investors and businesses in the real estate market would be an opportunity to purge the market, reduce weak investors and make it more professional," said Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry (VCCI).
Experts participating in the event agreed that the market had undergone a long slowdown, making businesses and investors in the sector face difficulties.
They said the market had been nearly frozen and reduced to the lowest possible level.
Statistics from the Ministry of Planning and Investment showed that in the first quarter this year, around 2,400 enterprises dissolved while 11,600 ones registered to cease their operation.
Can Van Luc, senior advisor of the BIDV bank's Management Board said more than 350 real estate transaction floors in the first three-months had been quiet despite of some trading in March.
Luc said estate prices in all segments of commerce, housing and tourism continued decreasing.
Sharing the ideas, Phan Thanh Mai, general secretary of the Viet Nam Real Estate Association (VNREA), said estate shares tended to decline strongly due to effects of the market and policies.
"Investors were reserved with share groups as they were worried about financial risks from estate businesses," Mai said, adding that the group would continue to cope with difficulties. Investors therefore should consider to choose good performing shares to avoid losses.
VietRees' survey conducted in eight provinces also showed that the reasons for the "quiet" market were due to extended investment, capital shortage, unstable macroeonomy factors and incomplete legal framework.
Mai added that 70 to 80 per cent of capital for estate projects were bank loans.
"Businesses have been under the pressure of capital costs because of high lending interest rates. Several firms tended to transfer a part or whole projects to others," he said.
In addition, it was a struggle for estate businesses, which had participated in the market for the last three to five years while the market was "hot", to take their investment back.
A survey of Asia Commercial Bank (ACB) said around 30 per cent of businesses could not access loans due to complicated procedures, mortgage shortages and high interest rates, though the Government had loosened credit for the estate market.
John Gallander, director of Savill, said the market needed professional marketing and sales people to attract buyers, while long-term capital would be the most important.
He said the Vietnamese estate businesses often mobilise capital from customers and bank credit. Listed enterprises could raise capital on the stock market while big ones could issue bonds with banks' guarantee.
Nguyen Trong Ninh, deputy head of the Ministry of Construction's Housing and Real Estate Management Department, said the ministry would submit to the Government in the second quarter to allow construction of 25-square-metre apartment.
Ninh said the area would suit the market demand and financial capacity, thus help investors sell their projects.
"The market shortcoming was that its development did not link to the market orientation and lacked planning," he added.
The ministry would work with banks to review estate projects, especially social housing ones which could be completed this year.
It asked banks to limit personal loans investing in the market.
A real estate investment trust fund would also be established to seek mid-and long-term capital with reasonable interest rates for projects. — VNS