Inventories continue to rise in large real estate businesses, even accounting for half of total assets, putting strong pressure on businesses in the Southern region.
Inventory accounts for more than half of assets
Although the market has shown signs of improvement, inventory continues to increase, especially for businesses with projects facing legal problems or illiquid segments.
Leading the group of enterprises with large inventories is Novaland Group. By the end of the second quarter, the inventory of this enterprise had increased to 142,024 billion VND. Compared to the total assets of the enterprise of 240,178 billion VND, Novaland's inventory accounts for nearly half.
Similarly, Nam Long Group recorded a sharp increase in inventory in the first half of the year. Accordingly, by the end of the second quarter of 2024, Nam Long's inventory value reached VND 19,164 billion, an increase of nearly VND 2,000 billion compared to the beginning of the year (VND 17,352 billion). Of this, the unfinished value of the Izumi Project was nearly VND 8,700 billion, Waterpoint Phase I was over VND 3,800 billion and Phase II was over VND 2,000 billion, Akari was over VND 2,400 billion. With total assets of VND 29,731 billion, Nam Long's inventory accounted for more than 64%.
Another enterprise, Khang Dien Group, also has a high inventory, up to VND21,458 billion, while at the end of last year it was only VND17,786 billion. Compared to total assets of VND28,401 billion at the end of June, Khang Dien's inventory/total assets ratio is up to 75%.
The reason for the increase in Khang Dien's inventory is that the value of unfinished construction at the Binh Trung Dong Ward Housing Project, with a scale of 5.8 hectares (Binh Trung Dong 1), increased by more than VND1,000 billion compared to the beginning of the year, to nearly VND4,200 billion. The value at Binh Hung 11A residential area also increased by more than VND900 billion, to more than VND1,500 billion.
According to the Vietnam Association of Realtors (VARS), in the structure of real estate inventory, the group of products from unfinished projects accounts for the majority, mostly due to legal problems, the rest is due to some segments not receiving good demand from the market.
For example, Hung Thinh Quy Nhon - the investor of the Merryland Quy Nhon and Grand Center Quy Nhon resort real estate projects (Binh Dinh province) recorded a loss after tax of about 199.4 billion VND in the first half of this year. This level is 5.8 times higher than the same period last year and exceeds the loss of more than 152 billion VND in the whole year of 2023.
Although the value of inventory was not announced, the sluggish resort real estate market, along with maturing bond debts, were the main reasons for Hung Thinh Quy Nhon's loss-making business results.
The latest report from DKRA shows that the resort real estate segment in general has not shown any signs of improvement. Many projects have had to postpone their sales launch, causing a shortage of supply, only appearing locally in the North.
According to DKRA, sharp decline in purchasing power, lack of new supply, high-value inventory... have caused significant obstacles in recent months, causing this segment to fall into a prolonged "hibernation" cycle.
Efforts to reduce inventory
When the market is favorable, a large inventory is not necessarily a burden, and can even be a great advantage for good projects. However, when the market is difficult, it will put a lot of pressure on businesses.
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that inventory is normal if it is part of the business plan and strategy of the enterprise. The worrying problem with inventory is that the products have been completed and sold on the market, but are not accepted by the market, meaning low liquidity.
According to Mr. Chau, large inventories for weak businesses, using high financial leverage will be a mountain of debt weighing on the business's shoulders, when there is no liquidity, the business will face difficulties.
To reduce inventory, some businesses are speeding up project progress to hand over early and be eligible for sale in the near future.
For Khang Dien, the value of its inventory is expected to decrease when it begins handing over apartments from The Privia Project in the fourth quarter of 2024. By the end of the second quarter of 2024, The Privia Project had sold all 1,043 apartments, with estimated sales of VND3,350 billion.
In a recent report, SSI said that Khang Dien is promoting a series of projects. Of which, The Solina project (Binh Chanh district) has a total land area of up to 16.4 hectares, the Company has completed compensation and site clearance for the entire project.
Similarly, with Novaland, the company said that it has handed over many products in major projects, currently 14/16 projects in the Group's ongoing project clusters are continuing to be built, with a total construction limit of 12,100 billion VND and are being disbursed in stages. The total value of products if completed and handed over as well as newly opened for sale is estimated at nearly 480,000 billion VND.
However, only a few businesses can reduce inventory, while many businesses are very worried about semi-finished inventory, that is, projects that have been implemented for many years but are still not completed due to legal problems, the solution lies in the hands of competent authorities. Only when the problems are resolved soon can this "blood clot" be released soon.
Source: https://baodautu.vn/batdongsan/gia-tang-luong-bat-dong-san-ton-kho-khu-vuc-phia-nam-d224754.html
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