Big realtors

Phat Dat Real Estate (PDR) has just announced its business results in 2022, showing sharp falls in revenue and profits. In Q4 2022, its revenue tumbled by 80 times to VND14.6 billion, while the figure was VND1.229 trillion the same period the year before.

With low revenue and high capital costs (VND140 billion), PDR took a loss of VND229 billion in Q4 2022, which was in contrast to Q4 2021, when it made a profit of ND751 billion. This was the first time that PDR had reported a quarterly loss in the last decade.

Explaining the unsatisfactory business results, PDR attributed it to difficulties in the market and the company’s investment portfolio restructuring.

The accumulated revenue of the company in 2022 dropped by 58 percent, and profits 37 percent compared with 2021. 

PDR shares were bargained away in October and November 2022 with prices falling to floor levels during trading sessions, while capitalization value dropped by tens of trillions of dong (75-80 percent) to VND9.2 trillion.

Other real estate firms also had to struggle to survive in Q4 because of poor sales and cash flow decline.

Dat Xanh Group reported a sharp fall of 57 percent in net revenue to VND984 billion and post-tax loss of VND460 billion, while it made big profits of VND245 billion in Q4 2021. In 2022, Dat Xanh saw revenue drop by 45 percent to VND5.58 trillion and post-tax profit decrease by 71 percent to VND469 billion.

Meanwhile, Hai Phat Invest (HPX) reported a 46 percent decrease in pre-tax profit in 2022 to VND227 billion, which led to a 80 percent reduction in HPX share prices from its peak.

Novaland and Hung Thinh have a high level of bond debts expected to mature in 2023, VND20 trillion and VND6 trillion, respectively. Phat Dat owes big amounts of money to banks and has VND2.5 trillion worth of bonds to mature this year.

Credit status

Reports all show that real estate credit has cooled down in the last 10 years with the credit growth rate falling from 30 percent in 2001-2010 to 14 percent in 2012-2021.

SBV has had to tightly control real estate credit to avoid the real estate bubble scenario.

In 2016, the central bank released a decision on lowering the proportion of short-term capital to be used for long-term loans, and raising the risk ratio of real estate loans.

Real estate credit growth is on the decrease, from over 26 percent in 2018 to 21.5 percent in 2019, 12 percent in 2020 and 15.37 percent in 2021.

In 2021, the State Bank of Vietnam (SBV) decided to delay the process of lowering the proportion of short-term capital allowed for long-term loans because of the pandemic. 

Because of the low interest rates, a large amount of money was poured into the real estate sector. Real estate prices escalated throughout the country.

At that time, despite the economic stagnation because of Covid-19, the credit growth rate was still high and a large amount of idle money went into real estate.

SBV reported that as of the end of 2022, outstanding loans provided to the real estate sector had reached VND2.58 quadrillion, up by 24.27 percent over 2021, higher than the 14.5 percent growth rate of total outstanding loans.

Real estate is one of the business fields with the highest growth rate, accounting for a large proportion of 21.2 percent of total outstanding loans to the economy, the highest level in the last five years.

The proportion of real estate credit was also relatively high, accounting for 21.2 percent in late 2022.

In its instruction dated January 27, the Prime Minister requested the Ministry of Finance (MOF) to submit the draft decree on amending and supplementing Decree 65 on bond private offering.

According to DSC Securities, 2023 would be the time for ‘settlement’ and ‘purification’, thus laying down a foundation for the next cycle. The real estate sector would regain the growth once enterprises can seek capital through many channels.

Duy Anh