Southern property sector’s capital woes

Dat Lanh Real Estate Company deputy director Nguyen Van Duc said scores of property firms could go bust if supportive measures were not aired soon.

In fact, around 70 per cent of projects now under construction in Ho Chi Minh City have delays due to lack of investment capital.
“Property market liquidity depends on two factors - credit availability and practical design adjustments,” said Duc.

Duc argued credit lines were strained on the back of difficult market. Input costs have soared, making it hard to rein in inflation, a decisive factor for banks to drive down lending rates which now stay high at more than 20 per cent, per year.

For the second factor, firms themselves should revise designs and build smaller houses targeting real consumers to lower investment costs and boost liquidity. However, state policy support was crucial for firms to take on this approach, according to Duc.

Ho Chi Minh City Real Estate Association chairman Le Hoang Chau assumed liquidity was now the southern market prime concern. “Bank liquidity will directly impact on the property market since most of transactions there relate to banks,” said Chau.

From the part of state management agencies Ho Chi Minh City Department of Construction deputy director Nguyen Van Danh commented there were a number of problems in the city’s housing segment where hi-end apartments are in glut and low-end and mid-range units for sale and for lease are under supply.

“Besides, property market capital lines are reliant on bank loans and susceptible to state policy changes,” Danh added.

Parallel to voicing several solution packages to prop [property] market development Chau unveiled the plan to buy up a certain number of apartments in property projects of city’s businesses to supplement the housing fund for resettlement.

“If the plan comes true, it will help tackle a big volume of firms’ inventories,” said Chau.

Echoing the idea, Thu Duc Housing Development Joint Stock Company chairman Le Chi Hieu said state incentives were in urgent need to help firms tide over difficulties.

“Ministries and sectors must sit together to seek ways out, from there awakening market potential,” said Ho Chi  Minh City Department of Urban Planning and Architecture deputy director Nguyen Hoai Nam.