Early settlement of cash flow in real estate

In the context of the difficult real estate market, businesses have difficulty accessing credit sources, issuing bonds and mobilizing capital from customers, leading to many businesses lacking capital, having to delay or temporarily suspend project implementation.

Inventory of hundreds of thousands of billions of dong

Incomplete statistics from the annual financial reports of real estate companies listed on the stock exchange show that by the end of 2022, the value of inventories of land funds and unfinished construction projects amounted to hundreds of thousands of billions of VND, a sharp increase compared to before. This means that a huge amount of capital is in land but the company cannot turn around the money to continue implementing. For example, No Va Real Estate Investment Group Joint Stock Company (Novaland) has nearly 134,500 billion VND in inventory, an increase of 22.5% over the same period and accounting for more than 50% of Novaland's assets. Currently, this inventory is mainly in 3 large projects: Aqua City, NovaWorld Phan Thiet, NovaWorld Ho Tram as well as from the transfer of new projects.

Nam Long Investment Corporation also has a large amount of inventory, although it has decreased slightly by 7.5% compared to the previous quarter and decreased by 4% compared to the same period in 2021, it still has nearly 15,000 billion VND in inventory. Unfinished projects are accounting for the majority of Nam Long's inventory, mainly in the Izumi project, Southgate project, Paragon Dai Phuoc project, Vam Co Dong project (Waterpoint), Hoang Nam project (Akari)... Meanwhile, Dat Xanh Group Corporation's inventory also exceeded 14,200 billion VND, up 20% over the same period last year.

One of Novaland's ongoing projects has a large inventory.

Some real estate enterprises said that they have not yet launched their products but the projects are stuck due to legal issues. Most of them are small and medium enterprises. Therefore, legal issues must be resolved soon to help enterprises launch their projects. Next, banks must open their wallets to help enterprises mortgage their projects to borrow capital and then sell their products. At that time, customers need to be supported with interest rates with flexible policies and loan conditions...

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that the association has made many recommendations regarding the current problems of projects in Ho Chi Minh City. Currently, there are more than 60 projects facing inspection, public land issues, and more than 140 projects facing legal issues. Some projects of other enterprises in Ho Chi Minh City are still unfinished and have many problems.

Development of real estate investment funds

Regarding the issue of rescuing the market and solving real estate inventory, according to Mr. Le Hoang Chau, it is still a matter of cash flow. Therefore, the Government needs to direct the State Bank to remove credit policies for the real estate market. The Ministry of Finance should have a "bond trading floor" under the supervision of the Ministry, and at the same time promote the development of real estate investment funds instead of relying on a credit channel.

Dr. Dinh The Hien, an economic expert, said that in addition to the policies that the Government, ministries and sectors are determined to resolve, the internal story of the current market is that of enterprises. Currently, many real estate companies are in debt with bonds but their products cannot be sold, they are stuck, so they do not have the money to pay off debts and other costs to operate the company. The best way to resolve this is to help them sell their products, such as: Increasing credit support to attract buyers to create liquidity, unblocking cash flow for enterprises with products or supporting credit for enterprises to restructure their finances...

The best way is to sell the unsold projects. While some businesses have reduced the price of their products by 30%-40%, there are no buyers. That means they need to reduce further to attract buyers. "Obviously, both buyers and sellers need to be honest with each other, but rescuing them like this is a bit difficult," said Mr. Dinh The Hien.

Mr. Hien further analyzed that if the market and real estate companies freeze or go bankrupt, it will affect a series of other issues, including the credit system. While many companies are currently facing difficulties, they still have potential, especially projects that are entangled in legal issues in neighboring provinces because they will be the driving force for economic development and infrastructure investment in the next few years, so credit institutions need to find ways to support them to overcome difficulties and stabilize soon. In particular, commercial banks have proposed that the Government and the State Bank have a special policy to extend the debt maturity for about 3 years to help businesses buy back bonds or extend debt under the control of the State Bank, thereby helping real estate companies and banks avoid creating a large "blood clot" that clogs the market...

Mr. Pham Lam, Vice President of the Vietnam Real Estate Brokers Association, pointed out two urgent issues of the current real estate market. The first is to resolve the inventory of real estate enterprises, especially the issue of liquidity. The biggest problem of liquidity is money, in which interest rates play an important role. At the same time, it is necessary to stimulate the market by reactivating a support package similar to the previous VND30,000 billion package so that buyers can access it. Second, in the long term, the Government must resolutely accelerate policies to remove obstacles, especially bottlenecks related to land use fees and administrative procedures.

Freeing the market from the epidemic

According to Mr. Le Hoang Chau, with the Government's determination to implement decrees related to the real estate market such as land procedures, construction management... In particular, these decrees are within the framework of the law under the authority of the Prime Minister without the need for laws. "The State has mechanisms and resolutions coming soon, so the remaining issue is the will of the provincial and city leaders to resolutely direct departments and branches to proactively resolve procedural problems early to free the market from the disease," said Mr. Chau.

Source: https://nld.com.vn/kinh-te/som-giai-quyet-dong-tien-trong-bat-dong-san-20230203214701679.htm