The market has gradually recovered.
Speaking to Thanh Nien , Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), affirmed that up to now, it can be said that the first quarter of 2023 has been the bottom of the real estate market. Up to now, the market has recovered but is still very difficult, the level of difficulty tends to decrease over time, the next month is better than the previous month, the next quarter is better than the previous quarter, clearly shown in Ho Chi Minh City.
Mr. Le Hoang Chau cited that in the first quarter of 2023, the real estate market in Ho Chi Minh City grew by negative 16.2%, then by the first 6 months of 2023 it had decreased to negative 11.58%, by the end of the third quarter of 2023 it grew by negative 8.71% and after 9 months the level of difficulty of the real estate market had decreased by 42.3% compared to the first quarter of 2023. At the end of 2023, real estate business was the only service industry with negative growth in Ho Chi Minh City, although it had continuously improved each quarter.
According to the Ho Chi Minh City Statistics Office, the local real estate business sector grew by negative 6.38% in 2023, an exceptional case when other service sectors all had years of growth from more than 3% to over 10%. Of the more than 52,100 newly established enterprises last year with registered capital of over VND470,300 billion, only 1,541 real estate businesses had a scale of over VND61,100 billion, down 38.7% in volume and 44.9% in capital.
Real estate businesses go through a year full of fluctuations and difficulties.
In addition, construction activities in Ho Chi Minh City are also less vibrant. As of the end of November, the city has issued nearly 21,300 construction and major repair permits with a floor area of over 4 million m2 , down 29% in permits and 29.6% in area compared to the same period in 2022.
Mr. Le Hoang Chau commented that up to now, the market still continues to have a lack of affordable housing, as well as no more social housing. The market continues to be unbalanced, with housing products out of phase, "skewed" towards the high-end housing segment. From 2020 to now, high-end housing has always accounted for an overwhelming proportion of up to 70 - 80% of housing products on the market, the rest is mid-range housing and there is almost no affordable housing, leading to a shortage of affordable housing and social housing is the type of housing that meets the real needs of the majority of people.
This has caused housing prices to increase continuously from 2017 to the present and remain "high" beyond the financial capacity of middle-income earners, low-income earners in urban areas, officials, civil servants, state employees, armed forces officers, workers and immigrants. Currently, with the price of an affordable apartment of about 2 - 3 billion VND/apartment, people with low-average income, with savings of about 100 million VND/year, will have to spend about 25 years to be able to buy a house, and if the social housing policy is not changed, people paying personal income tax level 1 (currently regulated under 60 million VND/year) will not be able to buy social housing.
According to real estate expert Phan Cong Chanh, the reason the real estate market has negative growth is because there are not many new products. In Ho Chi Minh City, the only new project for sale is Khang Dien Group, which has completed legal procedures and opened for sale. Most of the projects for sale recently are in the next stages. Because there are not many new projects, the market does not have many transactions, and businesses have no revenue. While there are no new products, the legal procedures of the projects are almost deadlocked, so access to bank loans is also not possible. "Real estate prices are still high, people are still waiting for real estate prices to decrease further before buying, making the already difficult market even more difficult. Up to now, the two bottlenecks of the real estate market, legal procedures and capital absorption, have not improved much, causing most real estate businesses to be unable to overcome difficulties," he assessed.
Early holiday and no work day yet
A "pocket" survey by Thanh Nien at real estate companies shows that up to this point, many real estate companies have given their employees Tet holidays and have not announced when they will return to work because they do not have enough resources to maintain operations. The remaining companies are also operating at a moderate pace because they are not selling well.
When asked when the company will have a Tet holiday, the leader of a real estate corporation admitted that most of the work has not been "running" for nearly a year. Currently, the company only has the leadership team and the legal department working, while the sales department has no more products to sell, so the company has cut down and laid off a long time ago, only keeping the management team. This department also does not know when it will go back to work because it is waiting for the market to recover and must have new products. "Up to now, the company still has to work from meal to meal, patching up to survive.
Even social housing cannot be built due to legal issues, let alone commercial housing. The company has a social housing project that broke ground on April 30, 2023, but the legal procedures have not yet been completed. So there is no Tet this year. Many employees ask me about bonuses, I say frankly that it is lucky to keep the job this year, don't think about Tet bonuses," he said.
The leader of Anh Tuan Real Estate Company also shared that for the past few years, his company has had nothing to do, almost falling into a state of "hibernation". "To be exact, for the past 4 years, there have been no products to sell, no money collected, and legal issues have been stuck, so there is no source of income. But it's not just us. Recently, when a few business brothers sat together, everyone complained. Big businesses are big, small businesses are small. This year, we are lucky to have salaries for our brothers, where can we get bonuses? Now the company has also laid off all its employees, out of more than 100 people, only 20 remain, and they are mainly doing legal and office work. Hopefully, in 2024, the company will complete the legal procedures for a project in District 7 and will have products to sell. If the project is not completed next year, we probably won't be able to hold on any longer," he said.
Also in a similar situation, Mr. Ha Van Thien, Deputy General Director of Tran Anh Group, has given the business sector a Tet holiday from mid-December 2023, while the operations sector will have it before January 15. "Because sales are not good, the company has given employees an early Tet holiday to both restructure operations and reduce operating costs. Up to now, maintaining the operating apparatus has been an extremely big challenge because the market is very difficult, products are scarce, and buyers are hesitant, making it even more difficult for real estate businesses," Mr. Thien said sadly.
Although they have overcome the most difficult period, no longer owe any bonds and have not laid off any employees, according to the leader of Phat Dat Group, this year the company and the employees themselves do not think about giving Tet bonuses.
Business leaders all expressed hope that by 2024, bottlenecks will be removed so that the market can recover.
Real estate prices are still high, people are still waiting for real estate prices to decrease further before buying, making the already difficult market even more difficult. Up to now, the two bottlenecks of the real estate market, legal issues and capital absorption, have not improved much, making it impossible for most real estate businesses to overcome difficulties.
Real Estate Expert Phan Cong Chanh
Real estate companies dissolved increase
Data recently released by the General Statistics Office shows that in 2023, the real estate business sector had 4,725 newly established enterprises and 1,286 dissolved enterprises. Compared to the previous year, the number of newly established enterprises decreased by 45%, while the number of dissolved enterprises increased by nearly 8%. On average, about 107 real estate enterprises left the market each month. The number of dissolved enterprises in the real estate business sector increased sharply compared to the previous year.
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