Real estate businesses are under great pressure as loans are limited and bond issuance is no longer easy. Capital has been an extremely painful problem for the real estate market recently. Since April market liquidity has been low, including primary and secondary goods.
|Nguyen Van Ngoc, Chairman, RB Group |
It is difficult for real estate enterprises to borrow input capital, issue bonds, and sell because banks have run out of credit room. So, real estate businesses are struggling with both input and output.
Recently, we have seen many investors who were not eligible for loans. In some cases, they were eligible for disbursement but the bank ran out of credit room, causing many conflicts between investors and buyers.
This is also the time to show off the financial strength of developers. Developers with strong finances will still be able to implement projects without being dependent on loans and bond issuance.
Some developers now have available cash for new land plots, mergers, and acquisitions, and are clearing the ground to prepare for a new cycle.
Individual investors will see the real estate market moving sideways or downwards, so they need knowledge to not lose money.
For example, the government is mobilising capital for production and business, tightening capital in real estate by providing a 2 per cent interest rate compensation for enterprises. In 2020 and 2021, capital flows went into real estate and securities channels instead of production and business. Now that the economy is recovering, these capital flows will be drawn to promote production and business, affecting the real estate market.
Against all difficulties, we see some positive signals like economic recovery, public investment, and good economic balance. If individual investors can choose high-potential areas that are benefiting from public investment and tourism, those with a long-term vision may profit.
In the second half of the year, many corporate bonds will mature. Businesses with transparent and reputable finances and good collateral will still be able to issue bonds, despite the quantity not being as high as in previous years, as the state is currently tightening bond issuance.
The State Bank of Vietnam will widen the credit room so that real estate businesses can access bank capital and support customers to buy real estate in the latter months of the year. Thus, the capital flow of businesses will be less troublesome. The real estate market at the end of each year is often in a good state, so realtors can try to push sales.
Individual investors without many funds should pour these into properties that can generate value immediately, such as cash flows from rent in the central areas of big cities or small-area land plots near those cities. Alternatively, land plots next to upcoming large industrial zones are the best bet in order to increase capital gains, as there is still low-priced land with clear legal certificates.