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Real estate market would be better if credit growth targets rise: experts

The State Bank of Vietnam's decision to raise credit growth targets for banks is expected to create favourable conditions for businesses to lend capital, including real estate firms, according to experts.
In the first half of 2022, capital flow to the real estate market were narrowed due to tight control of credit sources, and decline of the bond market. Photo chinhphu.vn

"This is a positive move to inject money into the domestic economy in the post-COVID-19 period, thereby energising the sectors, including services, production, business and real estate," said Su Ngoc Khuong, senior director of investment, Savills Vietnam.

This information has received special attention from businesses, investors and customers of the real estate market, according to the Savills Vietnam.

In the first half of 2022, capital flows to the real estate market were narrowed due to tight control of credit sources and the bond market's decline.

According to Khuong, the tightening of credit aimed to help the State prioritise capital for enterprises and projects in good operation. In addition, this move would limit bad credit, making it difficult for banks.

Vietnam is currently one of the countries with the fastest economic growth and recovery in the world in the post-pandemic period. That is helping the country attract a lot of attention and foreign investment.

After the Government reopened international flights, economic sectors have benefited, especially tourism and hotels.

This factor has created favourable conditions for foreign enterprises to enter the Vietnamese market, according to Khuong.

However, there are still legal obstacles in many real estate projects in Vietnam, causing hesitation for domestic and foreign enterprises and investors.

Nguyen Van Dinh, vice chairman of the Vietnam Real Estate Association, said the real estate market is going through a period of restructuring. As a result, house prices will increase due to rising costs so liquidity will decrease. As a result, investors tend to be more cautious in their investments.

If the difficulties in the property market are not removed, this market may have a long freezing period, causing difficulties for enterprises. Therefore, it is necessary to have supportive policies for the market's recovery process, said Dinh.

There has been an association between the capital and real estate markets. But it has lacked synchronous development, so the capital market has not had timely support for the real estate market when the channels supplying capital for the property market have been congested.

The Prime Minister has issued Directive 13, including directions of not hindering enterprises with good business results in mobilising capital for recovery and development. This is extremely meaningful because real estate enterprises have faced bottlenecks in getting capital, Dinh said.

Economic expert Dinh Trong Thinh told the Lao động (Labour) newspaper that it is very necessary to extend credit growth targets for some credit institutions in the current context.

In the past, many enterprises faced difficulties due to lack of capital when the bank stopped disbursing due to running out of credit room, according to Thinh.

He said that the economy is a strong recovery, and increasing the credit growth target will reduce pressure on capital at the enterprises.

Meanwhile, Le Viet Hai, chairman of Hoa Binh Group, also said that new information about credit room is very interesting in the market. The construction industry will have jobs when the real estate market warms up.

Investors cannot borrow capital to operate their businesses and not pay debts to contractors, leading to a series of difficulties. However, with good projects and reputable investors, there is no reason to control them tightly, Hai said.

He said it is also necessary not to tighten credit for homebuyers with real housing needs to boost the market.

In the context of many changes in credit regulations for the real estate industry, Khuong said that investors trust in calling for capital via merger and acquisition (M&A), and they are looking for international M&A consulting firms to get support in connecting with the right partners.

For the M&A trend of foreign investors in Vietnam's real estate market at present, Khuong said this is a great opportunity for domestic enterprises to improve their capacity to develop projects and attract new customers brought by foreign investors.

"In addition, for listed companies, this will assist them in attracting foreign capital on the stock exchange. Small-sized companies with low financial capacity need to have a strategy to restructure the investment portfolio and ensure the completion of the project's legal procedures," Khuong said.

Source: Vietnam News

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