Banks tighten credit as real estate developers search for more capital

Real estate firms are seeking new sources of capital as commercial banks have tightened lending.

In 2014-2018, the real estate market developed strongly with good capital flow but since the end of 2018, credit growth has been slowing down.

Banks tighten credit as real estate developers search for more capital



Analysts say the credit growth slowdown caused the real estate market to be quiet in the first nine months of the year since most real estate firms rely on bank loans.

Hanoi and HCM City saw sharp declines in both supply and number of transactions in Q3. In HCM City, very few no low-cost housing project have been launched. The selling prices of apartments have increased rapidly. Meanwhile, the resort real estate market segment was also quiet.

Nguyen Quoc Hiep, chair of the Vietnam Contractors Association, explained that the State Bank of Vietnam has decided to tighten the funding of real estate projects. In the past, commercial banks could use 45 percent of short-term mobilized capital for long-term lending. But the proportion has been cut to 40 percent.

Many projects cannot be fulfilled because of the lack of capital. These include CT Plaza Nguyen Hoang at No 18 Nguyen Hong Street in Go Vap district developed by Nguyen Hong JSC; and CT Home Binh Thanh at No 471 No Trang Long in Binh Thanh district developed by Cat Tuong Construction and Interior Decoration JSC.

In 2014-2018, the real estate market developed strongly with good capital flow but since the end of 2018, credit growth has been slowing down.

Le Hoang Chau, chair of the HCM City Real Estate Association (HoREA), commented that the HCM City real estate market is in a difficult period with very few transactions because of legal problems and stuck capital flow.

 


According to Chau, a series of projects have fallen into deadlock, showing signs of "clinical death". Therefore, real estate firms have to seek other sources of capital.

Nguyen Duc Quan from Asia Pacific Investment JSC commented that capital and legal issues are the two most important factirs for real estate firms at this moment. Seeking long-term capital with a good interest rate is their top priority.

According to Quan, the capital for real estate development is from four sources – stockholder equity, banks, investors and clients. As bank loans are becoming stuck, real estate developers have to focus on the three remaining sources.

“Access to the bond market will help ease reliance on bank credit,” he said.

Nguyen Hoang from DKRA Vietnam also confirmed that issuing shares and bonds is a growing tendency for real estate firms.

Thanh Mai 

Building credit: How SOEs can get foreign financing for infrastructure

Building credit: How SOEs can get foreign financing for infrastructure

State-owned enterprises (SOEs) face unique challenges when it comes to attracting foreign financing for infrastructure projects. But there are solutions.  

Vietnam’s credit growth projected to reach 10-year low of 13.2% in 2019

Vietnam’s credit growth projected to reach 10-year low of 13.2% in 2019

The slow growth comes mainly from state-owned banks, which have become more stringent on their loan disbursements.

 
 

Other News

.
Railway sector needs $10.4 bln to expand network in next decade
Railway sector needs $10.4 bln to expand network in next decade
BUSINESSicon  19/07/2021 

The Ministry of Transport (MoT) has proposed total investment of 240 trillion VND (10.4 billion USD) for the expansion of the railway network from now until 2030, to be sourced by the State budget and other legal sources.

Vietnam-China bilateral trade: overcoming chronic weaknesses
Vietnam-China bilateral trade: overcoming chronic weaknesses
FEATUREicon  19/07/2021 

According to data from the Vietnam General Department of Customs, Vietnam’s total import-export value by June 15, 2021 had reached US$288.68 billion, up 33%, or $71.55 billion, year on year.

HCM City faces severe shortage of vegetables, eggs
HCM City faces severe shortage of vegetables, eggs
BUSINESSicon  19/07/2021 

Vegetables and eggs are in short supply in HCM City due to disruptions in supply chains caused by COVID-19.

Vietnam named among world’s top 20 host economies for FDI for first time
Vietnam named among world’s top 20 host economies for FDI for first time
BUSINESSicon  19/07/2021 

Vietnam was named among the world’s top 20 host economies for foreign direct investment (FDI) for the first time in 2020 with an inflow of 16 billion USD.

Major transport projects to get underway this year, others to be completed
Major transport projects to get underway this year, others to be completed
BUSINESSicon  18/07/2021 

The Ministry of Transport plans to begin work on nine major infrastructure projects in the south this year to reduce traffic congestion and improve connectivity.

Support for businesses vital for economic recovery
Support for businesses vital for economic recovery
BUSINESSicon  18/07/2021 

During the current ongoing Covid-19 pandemic, it is of utmost importance that government authorities introduce policies that provide maximum support to keep businesses afloat, and sustain the economy as well.

Many hotels in HCMC increase room capacity
Many hotels in HCMC increase room capacity
BUSINESSicon  18/07/2021 

Many hotel owners in Ho Chi Minh City yesterday said that the number of booked hotel rooms has increased from 10 percent to 20 percent.

Hanoi targets GRDP growth up to 7.5% in 2021
Hanoi targets GRDP growth up to 7.5% in 2021
BUSINESSicon  18/07/2021 

Hanoi will take advantage of a shift in investment capital worldwide to attract foreign direct investment into the city.

ASEAN, Czech Republic look to standardise customs procedures
ASEAN, Czech Republic look to standardise customs procedures
BUSINESSicon  18/07/2021 

The Association of Southeast Asia Nations (ASEAN) Committee in coordination with the Customs Administration of the Czech Republic has held a webinar to introduce the electronic customs of the European country.

SBV allows banks to expand credit room
SBV allows banks to expand credit room
BUSINESSicon  18/07/2021 

The State Bank of Viet Nam (SBV) has just officially approved credit room extension for some banks.

Live streamers compelled to register with MIC if new draft decree adopted
Live streamers compelled to register with MIC if new draft decree adopted
BUSINESSicon  18/07/2021 

The Ministry of Information and Communications has proposed that only licensed social networking sites and accounts should be allowed to livestream to generate revenue.

VIETNAM BUSINESS NEWS JULY 18
VIETNAM BUSINESS NEWS JULY 18
BUSINESSicon  18/07/2021 

Over 425 million tonnes of cargo handled at seaports in seven months

Vietnamese top list of most online shoppers in SEA
Vietnamese top list of most online shoppers in SEA
BUSINESSicon  17/07/2021 

Vietnam has the highest number of people shopping on e-commerce platforms in the Southeast Asia region with some 49.3 million people, according to the E-commerce White Book 2021 released by the Vietnam E-Commerce and Digital Economy Agency.

Vietnam ‘promised land’ for digital banking
Vietnam ‘promised land’ for digital banking
BUSINESSicon  17/07/2021 

Vietnam is among the regional countries that are seeing new digital bank models, experts have said.

Textile and garment makers seek multitude of options
Textile and garment makers seek multitude of options
BUSINESSicon  17/07/2021 

As the current outbreak of the pandemic remains complicated, textile and garment makers fear lasting impacts on their operations, 

Bumps ahead for the giants of transport
Bumps ahead for the giants of transport
BUSINESSicon  17/07/2021 

After enduring months of losses, state-owned transport giants Vietnam Railways and Vietnam Airlines are pinning hopes on a financial lifebuoy to recover from the incurred losses – but even significant support may not be enough for them.

Tardy public spending will hinder post-pandemic economic recovery
Tardy public spending will hinder post-pandemic economic recovery
BUSINESSicon  17/07/2021 

The COVID-19 health crisis and the resulting economic downturn has thrown a spanner in the works of already tardy public spending, hindering Vietnam’s efforts to revive its post-pandemic economy and speed up slowing GDP growth.

Vietnam moving out of the epidemic more slowly than others, needs new policies
Vietnam moving out of the epidemic more slowly than others, needs new policies
FEATUREicon  18/07/2021 

Prime Minister Pham Minh Chinh affirmed that Vietnam’s development goals have not changed and agreed with the two GDP growth scenarios for 2021 developed by the Ministry of Planning and Investment.

Vietnam among top 20 FDI destinations in the world
Vietnam among top 20 FDI destinations in the world
BUSINESSicon  16/07/2021 

For the first time, Vietnam is among the top 20 countries attracting the most foreign direct investment (FDI) capital in the world, according to World Investment Report 2021 by the United Nations Conference on Trade and Development (UNCTAD).

Six cities and provinces to pioneer in use of e-invoices
Six cities and provinces to pioneer in use of e-invoices
BUSINESSicon  16/07/2021 

The General Department of Taxation plans to launch the electronic invoice system at tax departments in Ha Noi, HCM City, Quang Ninh, Hai Phong, Phu Tho and Binh Dinh by the end of this year before rolling it out nationwide in 2022.

 
 
 
Leave your comment on an article

OR QUICK LOGIN