Real estate businesses declaring bankruptcy and dissolution increased by 38.7%

The Ministry of Construction has just announced information on housing and the real estate market in the fourth quarter of 2022 and the whole year of 2022, showing that real estate businesses are facing many difficulties.

The number of real estate businesses declaring bankruptcy and dissolution in 2022 increased by about 38.7% over the same period last year.

Regarding the performance of real estate enterprises, the Ministry of Construction said that according to statistics from the Department of Business Registration (Ministry of Planning and Investment), the number of newly established enterprises operating in the real estate sector and the number of enterprises returning to operation in 2022 increased compared to the same period in 2021, of which: the number of newly established enterprises was 8,593, an increase of about 13.7%; the number of enterprises returning to operation was 2,081, an increase of about 56.7%.

However, the Ministry of Construction said the number of real estate businesses declaring bankruptcy and dissolution in 2022 also increased by about 38.7% over the same period last year.

According to the Ministry of Construction, 2022 is still a year when businesses operating in the real estate business sector face many challenges, with some corporations reducing up to 50% of their workforce to cope with current difficult conditions.

Regarding the cause, the Ministry of Construction said that real estate businesses are facing many difficulties due to difficulty in accessing credit loans, issuing bonds and mobilizing capital from customers, leading to many businesses lacking capital having to delay or temporarily suspend project implementation.

In addition, loan interest rates, foreign exchange rates, gasoline prices, and construction material prices have increased, leading to increased costs for businesses, affecting their production and business activities. There is a lack of cash flow to pay suppliers and pay workers' salaries because investors do not have the resources to pay and fulfill tax obligations.

Not only that, real estate buyers have difficulty accessing loans from credit institutions, indirectly affecting the liquidity of real estate products and projects, leading to businesses being unable to sell products to recover capital and reinvest.

"Enterprises are facing difficulties in issuing bonds and raising capital, leading to the risk that many businesses will not be able to pay and repay debts on time," said the Ministry of Construction.

For real estate trading floors, due to complicated developments in the economy, from the middle of the third quarter to the end of 2022, the operations of trading floors showed signs of becoming more difficult, the volume of real estate transactions decreased compared to the beginning of the year, leading to a decrease in the scale of real estate trading floors and the number of real estate brokers also decreasing.

According to the report of the State Bank of Vietnam, as of December 31, 2022, outstanding credit balance for real estate business activities is about 800,000 billion VND.

According to the report of the Ministry of Finance, as of October 28, 2022, the volume of corporate bond issuance reached VND 328.9 trillion, down 25.2% over the same period in 2021 and has a decreasing trend over the quarters. Of which, real estate enterprises accounted for 28.87% of the total issuance volume; ranked 2nd in the group of early bond repurchases and accounted for 35.8% (VND 451,159 billion) of the total volume of individual corporate bonds in custody as of September 30, 2022.

In the last two months of 2022, maturing bonds of real estate enterprises accounted for 38.3% of the total value of maturing bonds, of which 99.6% of maturing bonds of real estate enterprises had secured assets. In December 2022, enterprises issued VND 1,350 billion in individual corporate bonds, of which real estate enterprises issued VND 500 billion.

According to preliminary statistics from the Hanoi Stock Exchange, as of December 25, 2022, the outstanding balance of individual corporate bonds is about 2 million billion VND, of which that of real estate enterprises is 419 trillion VND (accounting for 33.6%).

In late 2022 and beyond, some businesses will still be under pressure to repay bonds early to investors for many reasons, including changes in policies to control corporate bond issuance.

Source: https://nld.com.vn/kinh-te/doanh-nghiep-bat-dong-san-tuyen-bo-pha-san-giai-the-tang-387-20230130184555964.htm