With large inventories, real estate businesses offer solutions to stimulate demand such as installment sales, monthly rentals or using financial leverage.
Enough ways to handle inventory
In 2023, An Gia Group will hand over the West Gate Apartment Project in Binh Chanh District (HCMC). The project is built on an area of 3.1 hectares, including 4 apartment towers with 2,000 products.
However, after handover, the project still has a large number of unsold products and is considered inventory. To deal with this quantity of goods, the investor has opened sales with a policy that customers only pay 10% of the apartment value, sign a sales contract and move in immediately; in the next 12 months, the buyer pays an additional 20%; 24 months later, the remaining 65% is paid.
In addition to the above policy, many apartments with inventory are handled by investors through monthly rentals, with two forms, including renting empty houses (with only basic furniture) and renting houses with preliminary furniture (bed, wardrobe, table and chairs).
The above strategy is quite effective and is also being implemented in a number of other businesses, such as Bcons, Novaland, Dat Xanh...
With the product line of townhouses and villas, investors are also implementing the above method, such as the Dragon City Project in Nha Be District (HCMC).
Due to cash flow pressure, many investors also apply other stimulus policies. For example, at the Summerland Mui Ne Project, to mobilize capital from inventory, the company has employees sign sales contracts, with each employee from the department head level and above buying a few products, then making a bank loan contract, from which the company has capital to rotate operations. When customers want to buy products, the investor will proceed to release the loan and sell to actual customers.
This is also the way other large real estate businesses in Ho Chi Minh City do in their projects.
Is inventory a concern?
According to the latest report of the Ministry of Construction, the real estate inventory in projects in the first quarter of 2024 of 56 provinces and cities nationwide is 23,029 units (including apartments, individual houses, and land). Of which, there are 3,706 apartments; 8,468 individual houses; and 10,855 land lots. However, the actual inventory is believed to be much higher.
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that this figure is not satisfactory and does not fully assess the inventory problem, especially for businesses with large inventories.
"This assessment may lead to the misconception that the current real estate inventory is very small and not a cause for concern, while in reality, the inventory is still very large and needs special attention to be resolved to ensure liquidity and stable, healthy development of businesses and the real estate market," Mr. Le Hoang Chau emphasized.
According to Mr. Le Hoang Chau, real estate inventories according to the enterprise's plan and inventories in the process of distribution and circulation are normal. What is of concern is inventories that have been put on the market but have not been consumed, because they are related to the enterprise's liquidity and credit relations with commercial banks in the issue of bad debt and credit safety.
Mr. Truong Van Thanh, General Director of Tay Nam Real Estate Joint Stock Company, said that in reality, after construction and handover, each project always has a certain amount of inventory, the lowest being 10% for apartments and 30% for townhouses, villas, and land. These inventory products are mostly in bad locations, so they are difficult to sell, even if the price is lower than other products in the same project.
According to Mr. Thanh, large inventories are a burden for businesses. However, selling this quantity is not easy, because over time, newly opened projects will receive more attention from customers.
The story Mr. Thanh gave is well-founded. For example, in 2018, Cat Tuong Group started construction and sales at Cat Tuong Western Pearl Urban Area, covering 80 hectares. In 2019, this enterprise started selling Cat Tuong Phu Hung Project, covering 92 hectares in Binh Phuoc Province. However, after many years of implementation, the inventory of these two projects still accounts for about 30%. Meanwhile, recent projects in the surrounding area have always had quite good transactions.
“With the current inventory level, I think businesses should have more innovative calculations in their business policies so that inventory remains a profitable product for the business, not a bad debt for the business,” said Mr. Chau.
Source: https://baodautu.vn/batdongsan/chu-dau-tu-du-an-bat-dong-san-xoay-xo-xu-ly-hang-ton-d221592.html
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