Home News Vietnam’s Real Estate Firms Sell Assets in a Time of Financial Distress

Vietnam’s Real Estate Firms Sell Assets in a Time of Financial Distress

Vietnam’s Real Estate Firms Sell Assets in a Time of Financial Distress

Vietnamese property developers are selling assets at discount prices as they have been under severe liquidity stress amid difficult market conditions, Vietnam News reported on Wednesday.

“Many high-profile real estate companies have sold all of their assets,” Minister of Planning and Investment Nguyen Chi Dung told a parliament meeting on Tuesday.

Some asset owners are under huge pressure, and foreign investors are seeing discounts of 50 percent off valuations, the minister said. “We have repeatedly warned about foreign takeovers of local companies.”

Foreign investors have been closely watching the market for some time and many of them started making their moves, said Duong Thuy Dung, chief executive of real estate company CBRE Vietnam.

However, many buyers and sellers remain at an impasse over the annual rate of return on investment as foreign investors expect the rate of return at 18-20 percent, while local companies can post an annualized return rate of 13-15 percent, the CBRE chief executive added.

Vietnam’s real estate market has slumped since 2022 as property developers have to deal with high interest rates, large bond paybacks and lack of mortgage availability.

In 2022, the number of new housing projects plummeted 90 percent, existing development projects halved and completed property projects plunged 81 percent from the year before, according to the Ministry of Construction.

The Southeast Asian country’s southern economic hub Ho Chi Minh City had about 70 property projects each year in the 2018-2021 period, compared to only 8 newly-licensed projects over the past two years, official data showed.

Housing market showed continued slowing momentum in the first quarter as the number of residential property transactions fell 39 percent compared to the same period last year, according to the Housing and Real Estate Market Management Agency under the Ministry of Construction.

Vietnam recorded a 63-percent fall in the number of new companies in the real estate sector in the first quarter from a year earlier, while permanent business closures in the sector rose 30 percent and the number of companies temporarily shut down increased 61 percent in the same period, said the housing and real estate market management authorities.

In a bid to help struggling property developers, the government has allowed bond issuers to extend payments by a maximum of two years and encouraged credit institutions to invest in corporate bonds.

In the latest attempt, the central bank has allowed commercial banks to restructure loans for struggling businesses, including those in the property industry, with repayment delays by up to 12 months.

A loan package worth 5 billion U.S. dollars to support affordable housing products was announced in March.

Vietnam’s property market is expected to stay faltered throughout 2024 despite a slew of measures by the government to boost market sentiment, industry experts said.

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