* Reporter: Dr. Tran Du Lich, many solutions to support the real estate market have been proposed, but why do businesses continue to report difficulties and need "rescue" in terms of both capital and legal matters?
- DR. TRAN DU LICH: I do not agree with the word "rescue". A synchronous solution is needed but not "rescue".
Not only at this time but over the past few decades, the Vietnamese real estate market has developed very quickly and strongly but unhealthy, reflected in excessive speculation. Of course, in a market economy, there is speculation in every field, but when speculation is excessive, it will cause distortions in supply, demand and prices.
For example, in the period 2009-2011, the real estate market only froze in the high-end product group, unfinished projects, land subdivision and sale, or projects that had just finished building the foundation and then left there... Meanwhile, finished products in the mid-range and low-price segments were still traded normally, even lacking.
In 2022, along with the excitement of economic recovery after the COVID-19 pandemic was controlled, the real estate market also grew rapidly in many product segments with a wave of investment and speculation quite popular. Many real estate businesses linked with commercial banks, committed to lending to stimulate speculation instead of creating conditions for people who need to buy housing.
While resort real estate and condotels are developing strongly, there is not much residential housing in urban areas. For example, in Ho Chi Minh City, in recent years there have been no new projects or new products in the housing segment for middle and low income people.
* If we "rescue" the real estate market, what will be the priority order?
- Everyone knows that real estate business is doing business with other people's money, including credit loans, bond capital mobilization, customer advances and part of the enterprise's own capital.
It is necessary to let the real estate market self-regulate and self-purify in parallel with a synchronous reform program from the government instead of putting the issue of rescue first. Photo: HOANG TRIEU
In the context of the volatile financial market, when all four sources of capital supply for the real estate market, especially corporate bonds, are no longer available, capital congestion is inevitable. Not to mention, a series of projects with conditions for development and continued implementation are stuck in procedures and legal issues, so the supply does not increase. From there, a vicious cycle arises: Projects under development do not have capital to continue implementation, new projects are entangled in legal issues.
Faced with this situation, I think the Government's biggest goal is not simply to immediately resolve the real estate market, but to have a relatively systematic plan to make the market healthy in the medium and long term.
* What is the specific solution, sir?
- There is a very close correlation between the financial market and the real estate market. Therefore, the solution to make the real estate market healthy needs to be synchronized with the handling of problems in the financial market through a large action program.
In terms of institutions, it is necessary to review all legal regulations related to the real estate market from the beginning of the project to operation and development, including: regulations on the credit system, regulations in the Law on Real Estate Business, Housing Law, Land Law, Construction Law... From there, adjust the shortcomings in the entire legal system, not just solve the difficulties in 1-2 laws.
With legal bottlenecks, it is possible to propose a working group to remove difficulties and obstacles for real estate projects to select some typical examples to handle, creating a legal premise for other places to follow and replicate the solution.
Note, use financial tools to control and limit real estate speculation. Prioritize housing projects with real market demand, in which priority is given to capital support for both home buyers and investors, in order to increase reasonable supply for the market. In fact, there are many abandoned urban areas with large capital flows buried here.
So where is the cash flow to circulate for residential projects that are really necessary for people in need? This situation is similar to the secondary market. The key is to let the market purify and handle itself, but how can we rescue it and who can rescue it?
It is recommended that large real estate enterprises proactively restructure to reduce financial pressure. Investors can restructure themselves by selling off projects that have caused them to be in debt, projects that are related to too many industries.
Investors need a risk management system, cannot be rampant, using financial tools excessively. The State Bank recently cited the example of real estate enterprises developing dozens of projects simultaneously across the country, how to save them? On the bank's side, it is possible to not transfer debt groups, restructure, extend, or defer debt for enterprises in this group.
The most important thing is to start doing it right away, the longer you wait the harder it will be!
(To be continued)
Source: https://nld.com.vn/kinh-te/go-kho-cho-bat-dong-san-cach-nao-20230214223803655.htm
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