Real estate firms urged to list

A view of Novaland's The Sun Avenue project. The HCM City Real Estate Association (HoREA) has recommended real estate companies transform themselves into publicly listed joint-stock businesses so they are able to seek greater funding to improve business performances in 2018. - Photo ndh.vn

The message was delivered in a recent document the association submitted to the city People’s Committee to address business policies for domestic property developers in 2018.

The association asked property developers to increase their equity to improve their internal strengths and study possible solutions to propose that the Government approve real estate projects as tradable assets, such as securities.

In the document, it also suggested property developers should issue corporate bonds, project bonds, shares and consider listing on foreign stock exchanges to raise capital funding.

“Property firms should merge and associate with each other to create joint ventures and large-cap firms that are strong enough to compete with foreign companies,” HoREA said in its statement.

“They should establish partnerships with foreign invested enterprises and investment funds, which have strong financial capacities, to cooperate, look for new project investments, draw more technical and financial support, exchange experience and improve the quality of their corporate governance.”

Such recommendations aim at helping local real estate firms cope with recent regulations to tighten lending policies and control non-performing loans among foreign-invested banks and credit institutions, which would make it harder for property firms to have access to capital funding, according to HoREA.

Those are also solutions to help the firms improve corporate governance, business efficiency and quality of products and services, it said.

The State Bank of Viet Nam, on December 28, 2017, issued Circular 19/2017/TT-NHNN to reduce the ratio of short-term capital used for funding middle- and long-term projects from 50 per cent in 2017 to 45 per cent in 2018, and 40 per cent beginning January 1, 2019.

On January 23, 2018, the central bank issued Document 563/NHNN-TTGSNH that required foreign-invested financial institutions to restrain their investments in the real estate sector and direct capital funding to other sectors.

To improve business performances, HoREA recommends businesses assure that earning targets are reachable and project developments are completed, so that they are qualified to receive loans from financial institutions.

In addition, real estate businesses must give first priority to the interests of customers, guarantee the quality and schedule of project construction, and develop green, environmentally friendly living conditions for customers, HoREA said.

Other issues that real estate companies should pay attention to include after-sales and customer care services, so that real estate firms can receive advance payment from customers, in accordance with regulations on trading of real estate projects.

According to existing regulations, real estate firms are able to raise 70 per cent of the contract value via advance payment from customers if the outputs are not yet transferred, and 95 per cent if the outputs are handed over.