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| To save themselves, real estate businesses must proactively review their resources and review existing projects. (Source: Dan Tri) |
What should businesses do to avoid "drowning on a pile of assets"?
According to information on Congluan.vn, since mid-May 2022 until now, due to many reasons such as the epidemic, market growth cycle, economic growth decline, market difficulties; a series of tightening policies on credit, corporate bonds... have caused the real estate market to fall into a state of stagnation.
Interest rates have remained high since the end of 2022, slightly decreasing at the beginning of this year but still at a high threshold for businesses to bear.
The pressure of increasing financial costs while cash flow is "scarce" due to not being able to sell goods, not being able to mobilize capital from bonds, not meeting credit loan standards... makes the "health" of businesses increasingly weaker.
The prolonged difficult situation not only affects real estate market participants but also causes stagnation in a series of other related industries.
VARs survey data with members who are real estate service businesses shows that if the market situation continues to be difficult, up to 23% of businesses can only maintain operations until the end of the third quarter of 2023, 43% of businesses can survive until the end of 2023.
If a timely exit is not found, the market will likely face the exit scenario of a series of entities, from real estate investment and development enterprises to real estate service businesses and real estate brokers. Many workers will lose their jobs, affecting social security.
Recently, the Government has issued a series of policies to help businesses defer and postpone debts. However, to save themselves, real estate businesses must proactively review resources and review existing projects. Only potential projects that businesses have the capacity to implement should be retained. Call for investment, joint ventures, partnerships, and sell part or all of projects that cannot be continued.
Mr. Nguyen Van Dinh, Chairman of VARs, said that enterprises need to proactively seek customers/investors or contact professional units to support connecting with those who want to cooperate in investment or buy back the project. To reach an agreement soon, enterprises need to reduce expectations, even be willing to accept selling at a loss, "cannot face difficulties but still demand profit".
In reality, many businesses, just trying to hold on, while their capabilities are not enough, have pushed themselves into a dead end with all kinds of "interest on interest". Then they receive the bitter fruit of a huge debt, with interest many times greater than the principal.
VARs report shows that for over a year now, the mergers and acquisitions (M&A) market has recorded a gradual increase in heat.
Some businesses are spending a lot of money on M&A to seek opportunities to expand the market and improve the profit margin of their business. Many groups of investors have "large" cash flows, looking for opportunities and are ready to invest in potential projects.
Among them, we must mention the capital flow from foreign investors that has been and will continue to flow into Vietnam in the coming time. Most of these investors are aiming for projects with relatively complete legal documents to avoid risks.
“This is an opportunity for investors to hold many “clean” projects, to sell projects or cooperate, creating value for both sides. It is a direction to help businesses manage cash flow to pay debts, avoid collapse and dissolution. Or bring cash flow to continue implementing other projects. Prevent loss and waste of land resources, restore production and business activities, and bring goods to the market,” Mr. Dinh commented.
Home buyers wait for interest rate cuts
The mobilization interest rates of banks have continuously decreased sharply in recent months and are the basis for the "cooling down" of lending interest rates. However, the reality shows that lending interest rates, especially home loans for individual customers, are still high, and financial pressure is increasingly heavy.
According to the survey, the home loan interest rate for existing customers at the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is about 10.7%/year; the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is from 9.1 - 10.9%/year; the Military Commercial Joint Stock Bank (MB) is about 13-14%/year; the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) is from 10-12.1%/year; An Binh Commercial Joint Stock Bank (ABBank) is from 14.6-15.4%/year...
For new borrowers, the most preferential loan interest rate this June is 4.99%/year at Vietnam Maritime Commercial Joint Stock Bank (MSB). Meanwhile, Tien Phong Commercial Joint Stock Bank (TPBank) and Saigon Commercial Joint Stock Bank (SCB) are offering home loans at 7.8-7.9%/year; Orient Commercial Joint Stock Bank (OCB) 8.49%/year... But these are all preferential interest rates applied for a short period, after which the floating interest rate will be calculated according to the market, estimated at about 13.5%/year.
The State Bank's consecutive move to reduce operating interest rates three times in less than three months, along with banks' deposit interest rates falling sharply compared to the "peak" at the beginning of the year, creates expectations that lending interest rates will fall.
But in reality, customers still have to "bend their backs" to pay off bank loans every month and continue to wait for interest rates to drop. Sometimes they even "sit on pins and needles" because they don't know whether interest rates will drop or continue to rise.
Explaining the story of loan interest rates not catching up with the decline in deposit interest rates, a bank leader said that most credit institutions had to mobilize at high interest rates in the final period of 2022. Therefore, loan interest rates need to have a certain delay, each bank has different adjustment steps depending on the input capital cost and financial capacity. In particular, old loans at a time when capital costs are high, it is even more difficult to lower interest rates.
According to the analysis team of Vietcombank Securities Company Limited (VCBS), lending interest rates decreased more slowly than deposit interest rates due to policy delays; at the same time, interest rate reduction mainly focused on a number of priority businesses and industries.
In addition, the financial reports for the first quarter of 2023 of 27/28 listed banks showed that the cost of paying interest on deposits increased by more than 50% compared to the same period last year; of which 9 banks increased by more than 100% compared to the same period. In addition, the costs of paying interest on loans, paying interest on issuing valuable papers... also increased at most banks. This partly explains why lending interest rates have not been able to decrease as expected.
Assessing the interest rate outlook, according to the baseline scenario, SSI Securities Corporation believes that interest rates may decrease by another 50-100 basis points from now until the end of the year and continue to decrease in 2024.
Can Tho wants to build an airport city of about 10,000 hectares
According to the Can Tho City Electronic Information Portal, Mr. Tran Viet Truong - Chairman of the Can Tho City People's Committee proposed planning an airport city of about 10,000 hectares at the forum "Prospects for investment in infrastructure construction - economic development in the Mekong Delta".
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| Can Tho City at night. (Source: Can Tho City Electronic Information Portal) |
Specifically, Mr. Tran Viet Truong proposed that the Ministry of Construction prioritize coordination and consultation to submit to the Government for early approval of the investment project to upgrade and expand Can Tho International Airport to meet regional/area standards, combined with the construction of additional ports to serve air cargo transportation, in accordance with the national airport system planning. This is a prerequisite for Can Tho City to serve as the basis for planning an airport city with an area of about 10,000 hectares.
Can Tho currently has Can Tho International Airport, built in the 1960s with a runway measuring 1,800m x 30m. The project was then renovated and upgraded to a runway 3,000m long and 45m wide, ensuring it can accommodate aircraft such as A320, A321 and equivalent, connecting Can Tho with Hanoi and other localities. The passenger terminal covers an area of nearly 21,000 m2 , serving 3-5 million passengers/year.
According to the previous plan mentioned by the People's Committee of Can Tho City, the airport city planning will have a land area of about 2,000 hectares to build a center for linking, producing, processing and distributing agricultural products of the Mekong Delta region. In particular, priority will be given to building an aviation logistics system, river ports and a central warehouse system to preserve agricultural products.
Removing difficulties for C4 subdivision planning and Bien Hoa general planning
At the working session with departments and branches on local planning work last weekend, Mr. Cao Tien Dung, Chairman of Dong Nai Provincial People's Committee, requested Bien Hoa City People's Committee to urgently coordinate with the Department of Construction to continue working with project investors on proposals to adjust detailed planning, reasons for adjusting C4 subdivision planning and Bien Hoa City's general planning.
At the same time, Mr. Dung noted that the Department of Construction should coordinate with departments, branches and the People's Committee of Bien Hoa city to review legal regulations. In particular, pay attention to regulations on conditions for adjusting the detailed project planning to ensure sufficient proportions of green land, public works, and social infrastructure according to the previously approved planning. These contents must be completed and reported to the Provincial People's Committee by June 12.
Subdivision C4 of Bien Hoa city's general planning covers an area of about 1,500 hectares, including the entire Long Hung commune and part of Tam Phuoc ward, Bien Hoa city, Dong Nai province. In the past, in this subdivision, investors have implemented urban and residential area projects such as: Long Hung residential area project, Dong Nai WaterFront urban area, Aquacity urban area, high-end commercial service urban area of Phuoc Hung island...
The project to adjust the general planning of Bien Hoa city was approved by Dong Nai Provincial People's Committee in July 2014, and the C4 subdivision planning was approved in September 2016. However, at the time of approval of the general planning and C4 subdivision planning, the detailed planning documents 1/500 of previously approved projects had not been fully updated, leading to inconsistencies and differences between the planning at all levels. Due to these differences, many urban area projects had to temporarily suspend construction and business, including the project of Novaland Group.
In an official dispatch sent to the Prime Minister last May, Mr. Dung had proposed a number of issues with real estate projects in Bien Hoa city. Among them was a proposal for the Prime Minister to consider approving the policy for the Dong Nai Provincial People's Committee to prepare a dossier to locally adjust the general planning of Bien Hoa city. At the same time, the Dong Nai Provincial People's Committee admitted that this was a local shortcoming in the process of planning establishment, appraisal and approval.
For real estate project investors in the area, the Chairman of Dong Nai requested a full report on the actual implementation status of the projects. From there, the Provincial People's Committee will synthesize and report to the Ministry of Construction and the Prime Minister. Regarding the conditions for selling future housing in the area in accordance with the approved detailed planning, Mr. Dung directed the Department of Construction to consider handling so that businesses can continue to sell future housing in accordance with the law.
The drastic intervention from all levels of government and functional agencies with the hope that difficulties and shortcomings will soon be resolved will bring confidence to people and businesses, help restore production and business, and contribute to promoting socio-economic development.
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