Hundreds of thousands of billions are 'frozen' along with real estate inventory

Multiple cart closing projects

According to statistics from incomplete reports from localities (17/63 provinces), the real estate inventory in the second quarter of 2023 is about 16,688 units, including products such as apartments, individual houses, and land.

Of these, there are about 1,714 apartments, 7,473 individual houses and 7,501 land plots. The inventory ratio is still mainly concentrated in the individual housing and land plot real estate segments of projects.

Regarding this issue, the Ministry of Construction stated that in the second quarter of 2023, although there were many positive signals supporting the recovery of the real estate market such as policy mechanisms, bank interest rates, etc., many projects still encountered legal problems and issues related to credit capital and bonds.

Through research, the recovery of the real estate market is still unclear although many investors have offered attractive discount policies with the expectation of restoring liquidity. However, the transaction volume in July was still not high, especially in some types of resort products.

According to a recent report on the real estate market by a number of research units, in the coastal tourist capitals of the country, there are nearly 30,000 unsold shophouses, townhouses, and resort villas, priced at tens of billions of VND each.

Resort real estate has a large inventory.

As for villas, the cumulative inventory by the end of the second quarter reached 15,000 units in both the North and the South. Of these, 2,400 units were opened for sale but had low liquidity and about 12,600 units in the next phase of projects were still in inventory, stuck in the real estate freeze period and had not yet been released to the market.

In the townhouse and beach shophouse segment, inventory by the end of June was also around 15,000 units. There were nearly 2,500 units that were opened for sale but had no transactions and about 12,400 units in projects that had been announced to the market but were waiting, unable to be launched when the real estate market was in crisis.

Sales data shows that in the second quarter of 2023, only 33 shophouses were sold in the second quarter of 2023, down 97% year-on-year, and 50 villas were sold, down 50% year-on-year. Notably, this volume of transactions is concentrated in a few prominent projects with favorable locations.

The above transaction volume has disappointed many people because previously, many investors offered extremely attractive incentives such as commitments to lease back, buy back or even increase the discount up to 40-50% for quick payment to quickly recover capital as well as increase liquidity.

Low liquidity has caused the inventory of some projects to reach more than 90% of products, which is a huge burden for investors because of the financial costs of borrowing capital to develop projects. Many projects have had to close their product lists to save costs, adjust policies and prices, and wait for the market to recover.

Real estate businesses are struggling to hold on.

According to recently released data from the General Statistics Office, in the past 7 months, there were 2,622 newly registered real estate enterprises, down 56.2% compared to the same period in 2022. The number of dissolved real estate enterprises in the past 7 months was 756, also up 17% over the same period last year.

At the end of the second quarter of 2023, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) Hoang Hai also said that many real estate businesses reported difficulties and challenges in business operations. Businesses had to change their business and management plans; in which, most businesses had to restructure debt, restructure business operations, reduce the scale of production and business investment, streamline the apparatus, reduce the workforce...

Many businesses are at risk of dissolution if the current state of the real estate market continues.

Survey data of the Vietnam Real Estate Brokers Association with members who are real estate service businesses also shows that if the real estate market situation continues to develop unpredictably in the coming time, up to 23% of businesses may only be able to maintain operations until the end of the third quarter of 2023 and only about 43% will survive until the end of 2023.

The above figures also accurately reflect the current market situation. After experiencing a peak period of “hot growth” in the number of enterprises, the market is purging enterprises that are weak in finance and operational capacity.

Although in recent times, the Government has continuously removed obstacles and created a legal corridor to help the market recover. For example, the issuance of Decree 10 amending and supplementing a number of articles of the decrees guiding the implementation of the 2013 Land Law, to find a way out for condotels - a type of property with a large inventory at present. But it seems that those "ways out" have not achieved the expected results.

Source: https://www.congluan.vn/hang-tram-nghin-ty-dang-dong-bang-cung-luong-hang-ton-bat-dong-san-post258937.html