Gov’t should buy bad property loans: experts
By Thoa Nguyen - The Saigon Times Daily
HANOI – The Government should take over certain bad property loans to give a much-needed boost to the long-distressed real estate market, experts said.
Loans owed by most property firms have fallen due, so credit easing for the sector will not help, Phan Thanh Mai, general secretary of the Vietnam Real Estate Association, said at a seminar held recently in Hanoi to discuss how to seek financing for the real estate sector.
He suggested the authorities should buy some bad property loans to lend a helping hand to both debtors and creditors. This will make it possible for property firms to take out new loans, thus fueling growth in the banking system.
The buyers of these bad loans will benefit when the market regains growth momentum, said Mai.
At the seminar, experts and business executives suggested a couple of solutions to pull the realty market out of the doldrums.
Nguyen Thi Mui, former member of the National Advisory Council for Monetary Policy, underscored the tight relationship between the selling and leasing markets. The leasing market now plays a more vital role in stimulating the selling market, she said.
When prices are high on the selling market, consumers will switch to the leasing market, and vice versa. China has succeeded in rescuing the frozen realty market by raising leasing prices, forcing consumers to choose to buy properties, said Mui.
Meanwhile, Nguyen Van Hoang, general director of Vietnam Real Estate Investment Trusts Management Co. (VREIT), said there should be tools to lure foreign capital into the market, in which a legal framework is a key factor. The country should also mobilize capital from people and foreign investors into property investment funds as domestic capital is now mostly sourced from banks.
Trinh Van Quyet, chairman of FLC Group, suggested the Government consider corporate tax cuts or extensions for realty firms so that they could ride out difficulties and continue work on their projects.
The authorities should promote foreign direct investment and make life easier for overseas Vietnamese to develop and possess properties in Vietnam, thus spurring incoming remittances and market growth, he noted.
Consumer demand for properties remains strong, said Vu Cuong Quyet, general director of Dat Xanh Mien Bac Joint Stock Company, citing that property trading had become more active in late March than in preceding months.
The local realty market is forecast to move flat or drop slightly this year, then bounce back and reach its peak in late 2014 or early 2015. Many factors show that the market is now at its nadir, where changes will occur and push the market up, said Tran Kim Chung of the Central Institute for Economic Management.
He explained global markets were recovering and that the nation’s macro economy was stable as seen through easing inflation, lower bank interest rates and forthcoming financial tools for the troubled real estate market.