30.4 per cent of real estate companies, or a total of 554, were dissolved in the first five months of 2023. Along with this, the number of newly registered property firms decreased by 61.4 per cent on-year.
|30.4 per cent of real estate companies ceased operations in the first five months |
The information was published at a conference organised by the Vietnam Association of Realtors (VAR). According to VAR, the revenue of these companies dropped by 6.46 per cent and the after-tax profits decreased by 38.6 per cent on-year.
In this difficult context, many companies had to dismiss staff. Five of the 20 real estate companies with the largest lay-offs included Dat Xanh Group (41 per cent of all employees), Dat Xanh Real Estate Service JSC (45 per cent), NovaGroup (20 per cent), Sunshine Homes (16 per cent), and An Gia Real Estate Investment and Development Corporation (29 per cent).
According to information from the Ministry of Construction, from early this year, real estate companies continually voiced their concerns about accessing loans, issuing bonds, and mobilising capital from customers. In addition, the foreign currency ratio, the increase in the price of gas, and the soaring cost of construction materials pushed the companies to deadlock.
The waning confidence of homebuyers in the sector was the first reason behind their tightening budgets, but high deposit rates also play a part by incentivising investors to put their money into banks rather than in real estate.
Another factor is the global economic downturn that has been sapping demand across the board. The real estate sector was among those that bore the brunt of the weakening demand.
DKRA Group said resort real estate was stuck in limbo as most of the products in the segment cannot sell. The global economic depression hit so hard that the demand for villas and shophouses fell by 98 per cent and 99 per cent respectively in April.
| ||Procedures and practices to lure quality foreign investment |
Vietnam recorded total accumulated foreign direct investment of nearly $439 billion by the end of last year, of which accumulated capital in real estate reached $66.3 billion. Trang Le, head of Research and Consulting at JLL Vietnam, shared with VIR’s Binh An an assessment of the positive changes in the field in recent years.
| ||Foreign groups retain interest in property |
Although foreign capital in real estate fell by more than half in the first five months of 2023, positive signs are afoot as foreign backers continue to pinpoint Vietnam’s advantages.
| ||High interest rates cast shadow over real estate |
Despite improved liquidity compared to the outset of 2023, bank lending rates remain a key factor in resolving the current slowdown in the real estate market.
| ||Some way to go for proptech to hit home |
The real estate technology sector in Vietnam is still struggling to find a way to survive despite being recognised as a huge potential market, with nearly 40 companies ceasing operations in the first five months of the year.