According to VARS, businesses are still trying to "struggle and kick" and are ready to "cling" to any lifebuoy. However, the lifebuoys to save the market that the Government has proposed have not yet reached businesses. While the resilience of businesses is limited, if they do not "surface" in time, they will certainly enter the stage of "choking on water, stopping breathing" simultaneously.
VARS survey data shows that in the first 5 months of the year, 554 real estate enterprises were dissolved, an increase of 30.4% over the same period last year. Meanwhile, the number of newly established real estate enterprises decreased by 61.4% over the same period, to only 1,744 units.
The decline in the number of real estate brokers has become a widespread wave across localities across the country. The number of active brokers is only about 30-40% compared to the end of 2022.
In the first quarter of 2023, real estate enterprises' revenue decreased by 6.46% year-on-year and after-tax profit decreased by 38.6% year-on-year.
Large inventories, mainly from unfinished construction projects, were forced to suspend because businesses no longer had enough resources to continue implementing the project. "Poor, unattractive, and lacking" are the exact words to describe the current supply situation in recent times. Specifically, in 2022, the supply to the market reached about 48,500 products, just over 20% of 2018 (the year before the Covid-19 pandemic). The supply structure is mainly high-end, high-value products. By the first quarter of 2023, the supply to the market reached about 25,000 products, mainly inventory from previously launched projects. The market is completely lacking in information about new projects launching for sale.
A project had to be "covered" due to procedures and financial difficulties.
Lack of suitable supply, weak cash flow and reduced confidence have caused the transaction volume in 2022 and the first quarter of 2023 to trend downward. Specifically, the overall absorption rate of the whole market in 2022 reached about 39%, equivalent to 19,000 transactions, only 17% compared to the transaction volume in 2018.
The overall absorption rate of the entire market in the first quarter of 2023 was only about 11%, equivalent to more than 2,700 transactions, down more than 50% compared to the same period in 2022. The traditional market of real estate trading floors and brokers mainly relies on urban and resort projects. However, projects on the market in most localities are in a "shelved" state, waiting for approval. For example, in Hanoi, Ho Chi Minh City, Da Nang, Nha Trang, Quang Ninh... in the context of economic downturn, the efficiency of use and business, especially with resort real estate, is very low.
Regarding revenue, VARS's survey results with members show that more than 90% of businesses recorded a decrease in revenue in the first quarter of 2023 compared to the same period last year. Of which, up to 39% of businesses had a decrease in revenue of 20-50% and 61% had a decrease of over 50% compared to the same period. Some businesses with less than 100 employees even had a decrease in revenue of up to 70-80%.
The above difficulties also forced many businesses to adjust their workforce. Data from the 20 real estate businesses with the largest total assets (as of December 31, 2022) showed that up to 6 businesses had to significantly cut staff in 2022. In general, over 95% of real estate businesses nationwide had to reduce their workforce and up to 50% of businesses had to reduce their workforce by more than 20% compared to the second quarter of 2022.
VARS predicts that if the real estate market continues to be difficult, up to 23% of businesses will not be able to maintain operations until the end of the third quarter of 2023 and only about 43% of businesses will survive until the end of this year.
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