Once banks restrict lending, this will affect the real estate market

Trang Bui from Jones Lang LaSalle said that the State Bank of Vietnam has decided to tighten real estate credit. However, the expert believes that the market will be unaffected by the move.

Commercial banks disbursed too much money for the real estate sector. The capital encouraged investors to develop more projects. However, in many cases, banks cannot sell their products and pay debts.

“Banks have become more skeptical when considering projects to fund. Only investors with good financial capability and projects with potential can access bank loans,” Trang said.

She went on to say that there have been some adjustments in real estate credit. Banks tend to increase the number of loans to buyers (demand) and reduce loans to real estate developers (supplier).

Troy Griffiths from Savills Vietnam said that the policy on tightening the capital flow to real estate sector will affect the capability of developing projects in the future. 

This will also put a heavier burden on project developers. However, given that house prices are rising so fast, it is necessary to encourage policies that are effective. 

As banks tend to tighten their disbursement for real estate projects, realtors tend to seek capital from foreign partners. Analysts predicted that more M&A deals would be made in the immediate time.

Vietnamese developers have good understanding about the domestic market and legal framework, while foreign investors have powerful financial capability and project development experience.

HCMC witnessed many M&A deals in Q3, including ones in which Frasers Property bought 75 percent of Phu An Dien Real Estate, valued at VND799 billion. CapitaLand , through its subsidiaries, acquired 86 million shares of BCLand, worth VND1.38 trillion.

Domestic investors also made a lot of M&A deals recently. Vinhomes JSC, for example, acquired 32.2 million shares of GS Cu Chi Development JSC, the developer of Cu Chi golf course project, capitalized at $42.6 million. 

Meanwhile, Dat Xanh Group has taken over Ha An Real Estate.

According to JLL, REITs (real estate investment trust) funds have been expanding their investment in Vietnam, especially HCMC. The deal worth $130 million made by SHREIT – REIT listed in Thailand can show the attractiveness of investment properties in Vietnam in foreign investors’ eyes.

The real estate market is still attractive enough to lure capital from different sources. Experts also noted that a large proportion of kieu hoi or overseas remittances have been flowing into the real estate market.

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