Real estate businesses yet to recover

Real estate businesses have yet to recover

According to the Business Registration Agency under the Ministry of Planning and Investment, the real estate business continues to be under great pressure, so the number of new enterprises entering the market and newly registered capital decreased by 59 and 54 per cent, respectively on-year.

The number of real estate businesses withdrawing from the market is still high, over 40 per cent on-year, the highest number among 17 fields and industries.

In a report released in early June, the Vietnam Association of Realtors also said that real estate businesses were "drowning."

The Ministry of Construction in recent comments also said that the real estate market had yet to overcome all the difficulties.

The current burdens of real estate businesses contrast with the impressive growth in the number of enterprises entering the market in the first half of 2021, about 45 per cent higher than in 2020.

However, looking at the business picture in general, there are some positive signals in the market. In June, the number of newly established and re-entered firms on the market reached about 21,000 enterprises.

Generally, in the first half of the year, there were more than 113,000 newly established businesses and returning to the market, an average of 19,000 firms per month. About 100,000 businesses withdrew, or an average of 16,600 per month, decreasing by 6 and 13 per cent respectively, compared to the average of the first five months and four months of the year.

"These are positive signals as enterprises' production and business activities are facing many difficulties," reported the Business Registration Agency.

However, the average registered capital per enterprise in the first half of the year only reached VND9.3 billion ($388,000), the lowest in the same period over the past five years. The additionally registered capital also decreased by more than 48 per cent on year.

Burdens in orders, increased inventories, high raw material prices, and weak purchasing power are the reasons why businesses are reducing the need for new loans.

The agency recommended that policies supporting, and promoting trade and removing market difficulties for businesses should be accelerated by ministries and agencies. Because enterprises need solutions to accelerate output for debt payment and to absorb new capital.

Foreign investors struggle to conclude fruitful real estate M&A transactions Foreign investors are growing enthusiastic about Vietnamese real estate, yet there are few successful deals.

Foreign investors optimistic on added property attraction Vietnam’s property market is still attractive to the foreign community, but it is necessary to continue to improve its legal landscape, information transparency, and data availability to create further enhancements for foreigners to invest.

Industrial real estate firms to benefit from land fund shortage The demand for industrial land for lease in Vietnam remains high, but the supply of industrial land is low.