Property developers diversify funding sources amid tighter credit

According to a VIS Rating report issued on April 20, the State Bank of Vietnam has signalled plans to curb overheating in the real estate bank credit growth, capping overall credit expansion at 15 per cent in 2026 after developer loans witnessed a 36 per cent surge on-year in 2025.

As a result, developers are expected to increasingly rely on bond issuance, equity raising, and mergers and acquisitions (M&A) to meet their funding needs.

Residential real estate bond issuance approximated $5.16 billion in 2025, a 40 per cent on-year rise, and VIS Rating anticipates the momentum will continue in 2026.

The refinancing imperative comes as $3.96 billion in real estate bonds due to mature in 2026, up 74 per cent from the prior year. Activities in the first four months support that view, with five residential real estate issuers placing seven bonds totalling $970 million, up nearly 150 per cent on-year.

Some notable bond issuances included Phat Dat Real Estate Development Corporation with $224 million, Marina Centre with $407.8 million, and New Times JSC with $320 million, all issued in March.

Equity and M&A channels are also gaining traction. Registered real estate foreign direct investment reached $7.1 billion in 2025, up 13 per cent on-year, while equity raised by listed developers increased 34 per cent over the same period.

VIS Rating said robust capital market sentiment, partly driven by Vietnam’s equity market upgrade, is expected to continue supporting developer fundraising throughout this year.

In one of the largest cross-border transactions of the first quarter, Japan’s Mitsubishi Corporation completed the acquisition of Thuan An 1 high-rise residential project from Phat Dat for more than $76.1 million after more than a year of negotiations.

The deal grants Mitsubishi full ownership of the project, part of a 4.4-hectare residential complex in Ho Chi Minh City.

Viconship, one of Vietnam’s leading seaport operators, completed a $36.6 million acquisition of a 65 per cent stake in Harbour City Co. Ltd on March 16, positioning the logistics firm as controlling shareholder of the newly established real estate developer to build a 6,000-square-metre venture in Haiphong’s Cat Bi Airport Intersection New Urban Area.

On the equity side, Nam Long Investment Corporation successfully completed a share issuance approximating $100 million in late 2025 to fund investment and land bank expansion in 2026.

Phat Dat is also in the process of completing a further rights issue at a ratio of 5:1 aimed at raising nearly $79.6 million.

The divergence in credit profiles, however, is set to widen. VIS Rating expects large developers with substantial handover pipelines, such as Vinhomes (Green City, Golden City), Nam Long (Izumi City, Southgate) and Dat Xanh (The Privé), to remain financially resilient in 2026, underpinned by strong cash flows from project deliveries.

In contrast, developers entangled in legal disputes or hospitality projects, including Novaland, Danh Khoi Group, and Asia-Pacific Investment JSC, are likely to face persistent refinancing difficulties, characterised by negative operating cash flow, limited liquidity, and restricted market access.

Condo prices in Hanoi and Ho Chi Minh City climbed by 20 per cent on-year in 2025, and average mortgage rates are forecast to rise a further three to four percentage points in 2026, driven by higher deposit rates and tighter room for real estate credit.

The primary condo absorption rate already dipped to 95 per cent in 2025 from 106 per cent the year before, suggesting buyer sentiment is cooling in response to affordability pressures.

VIS Rating expects prices and transaction volumes to weaken further this year, prompting developers to pivot towards lower-priced segments.

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