VPBank CEO addresses challenges and strategies for Vietnam's real estate sector

"The real estate market is grappling with difficulties due to the liquidity crisis and bond issues spilling over into real estate, causing interest rates to soar and costs to escalate. Additionally, 70-80 per cent of the current challenges stem from state regulatory policies, legal issues, and enforcement processes," Vinh stated.

The CEO suggested that the job of managing real estate issues primarily falls to state agencies, emphasising the need to clear the legal bottlenecks.

"In cases where we've provided loans for projects, some have still been stagnant for three years. The resolution of the real estate issues is now largely in the hands of the state authorities, and there's a need to clear a legal path forward," he shared.

Vinh proposed the State Bank of Vietnam extending Circular No.02/2023/TT-NHNN dated April 24, 2023 to June 30, 2024 on debt restructuring and maintaining the same debt group to facilitate banks and real estate businesses.

He also called for a review of the risk coefficient for real estate loans – currently at 200 per cent – and a reconsideration of the target audience for the 2 per cent interest rate support package.

"If real estate is considered a crucial sector, it shouldn't be viewed negatively. A risk coefficient of up to 200 per cent, due to this sector's high credit proportion, should be reconsidered. Reducing it could be a practical solution, contributing positively to the market's image," he said.

Additionally, Vinh suggested altering some support packages with low disbursement rates, potentially shifting the support mechanism from developers to customers.

"For the 2 per cent interest rate support package, it could be applied to homebuyers, addressing the legitimate demand for housing and resolving the issue of undistributed funds of VND40 trillion ($1.69 billion)," he explained.

He urged real estate businesses to self-reflect and embrace transparency.

"VPBank is one of the largest real estate lenders, yet even we feel apprehensive," he revealed.

Vinh also advised that real estate businesses should consider selling off assets during tough times, even at break-even or slight loss, and collaborating with banks on debt repayments rather than waiting passively for support.

The CEO asserted, "Interest rates have decreased significantly, even for old loans. As the market determines the rates, it is not feasible to demand the government for preferential rates because that would go against market principles."

He declared that legally compliant real estate projects are safe in terms of banking loans.

"Until the end of the year, we commit to disbursing funds for sound projects in industrial real estate and housing. For projects facing difficulties, like Novaland, once legal issues are resolved, we will immediately disburse funds," he concluded.

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