Real estate market has been found gloomy in the first quarter this year instead of being noisy as it used to be in previous years.

A under construction project in HCMC 

The market’s supply source has mainly come from public land after state own enterprise equitization and factory removal.

However, this source has reduced after the city reviewed loss in equitization. HCMC Department of Construction said that 53 projects have been halted and waited for auction procedures.

A big real estate firm in HCMC said that a nearly 40 hectare project near Thu Thiem peninsular has been affected with inspection over land allocation in Thu Thiem new urban area project.

Another project has also been stuck with half-done procedures because of equitization inspection.

In previous years, Hung Thinh Real Estate Company offered for sale around 5,000 apartments from tens of projects. This year, Mr. Nguyen Nam Hien, director general of the company, admitted that the company must seek supply source in other provinces because it has been scarce in HCMC.

The company has been seeking apartment block and housing land projects to buy but the number of projects with complete legal documents has been few.

Mr. Ngo Quang Phuc, director general of Phu Dong Group, said that businesses have focused on apartment projects in Binh Duong province with the value of less than VND2 billion (US$86,000) an apartment.

Projects in HCMC have been congested with incomplete legal procedures.

Reports by CBRE Vietnam show that the number of new apartments offered for sale in HCMC in the third quarter this year reached 6,711, down 14 percent over the same period last year.

JLL Vietnam Company said that supply of villas and town houses reduced up to 47 percent this year.

Loan access difficulty

State Bank of Vietnam (SBV)’s Circular 36/2014, the ratio of using short term capital for medium and long term loan in the real estate market will reduce from 60 percent in 2016 to 50 percent, 45 percent and 40 percent in 2017, 2018 and 2019.

Many real estate businesses, investors and consumers have reported loan access difficulties as banks have gradually limited property loans. Some have increased interest rate to set up a technical barrier to limit loans for house purchase.

According to HCMC Real Estate Association, the capital supply reduction will put businesses in front of many challenges and force them to restructure to reduce dependence on credit source.

They must manage to increase equity by cooperation, joint venture and merger with other firms to form strong property groups. Another solution is to change into joint stock companies to call on investment capital from the society, issue corporate and project bonds to increase capital to develop projects.

Despite calling on businesses to fortify themselves, the association has proposed SBV to temporarily halt the capital supply tightening to reduce difficulties for businesses in the upcoming time.

SGGP