VIETNAM, November 21 – HCM CITY – Prime Minister Phạm Minh Chính has ordered the formation of a task force to analyze and help address the challenges facing the real estate sector.
The working group will be led by Minister of Construction Nguyễn Thanh Nghị, Deputy Minister of Construction Nguyễn Văn Sinh and Deputy Governor of the State Bank of Việt Nam Đào Minh Tú.
The task force is made up of senior officials from the ministries of construction, planning and investment, natural resources and environment, public security, and the banking and finance sectors, according to a decision. of Deputy Prime Minister Lê Văn Thành.
It aims to remove barriers for real estate businesses in Hà Nội, HCM City and other provinces.
The real estate sector plays a major role in the country’s economy, contributing 11% of the national GDP. It also maintains organic relationships with other areas and creates many jobs.
However, the sector has recently faced multiple problems such as shortage of capital and low liquidity, which led to the postponement of many projects.
As banks restrict lending, companies are left with only one option, which is to issue new bonds to pay for the previous issue, experts said.
However, authorities continue to investigate and punish real estate and bond fraud while credit quotas remain constrained, which has caused investors to lose confidence in the industry, leading to a sell-off as there is no buyers.
Many real estate companies have had to borrow money from different sources at high interest rates or even sell some of their assets.
During a recent meeting between the Government Office and representatives of the real estate sector, Lê Hoàng Châu, president of the HCM City Real Estate Association (HoREA), said that a number of real estate companies are facing the risk of decrease in liquidity and may have to make painful decisions. to survive.
Many real estate developers are also reducing their activities, as evidenced by investment or construction delays, he said.
They have stopped developing new projects, issuing new bonds or launching IPOs, he added.
Property developers have also cut their workforces, some by as much as 50%, according to Châu.
Experts said a huge amount of corporate bonds expiring and due to be paid in the last months of the year and 2023 and 2024 put a lot of pressure on issuers, which are mostly companies real estate.
A recent corporate bond market report by VCBS Securities Company showed that in the fourth quarter of 2022, there are approximately VNĐ85 trillion of bonds issued by banks and real estate companies that will mature. The volume of corporate bonds maturing in 2023 and 2024 is estimated at 790 trillion VNĐ.
For real estate businesses, HNX data also showed that by the end of the year, hundreds of billions of đồng bonds issued by real estate companies will mature.
Experts said the real estate sector’s challenges are expected to last well into 2024 as capital scarcity, low liquidity and an expected global economic recession cast a shadow over the sector. —VNS