Vietnam real estate industry faces sell-off pressure at year end

Real estate sector currently finds itself under a great deal of sell-off pressure as local lenders not only limited offering real estate loans but also put an emphasis on recovering their funds from real estate projects.

Real estate sector currently finds itself under a great deal of sell-off pressure as local lenders not only limited offering real estate loans but also put an emphasis on recovering their funds from real estate projects, the state-run news website VnExpress (vnexpress.net) reported.

LienViet Post Joint Stock Commercial Bank (LienViet Post Bank) immediately stopped cashing in new property projects and was currently focusing on debt collections to reduce the outstanding loans in non-production sectors to 16% before year end as regulated in Directive No.01 of the central bank, said Nguyen Duc Huong, Deputy Chairman of the bank.

Bank for Investment and Development of Vietnam (BIDV) said that the bank did not intend to provide any new real estate loans although the proportion of the bank’s non-production to outstanding loans as of June 30 stayed below 16%, said Pham Quang Tung, Deputy CEO of BIDV, adding that some real estate loans of the bank needed restructuring.

PVL recently announced that the company would cut the sale prices of 85 Petro Landmark apartments by 35% from VND23.8 million/SQM to VND15.5 million/SQM due to the upcoming due debt of VND100 billion from LienViet Post Bank due on November 23th, 2011.

Following PVL, Sai Gon Mekong also cut prices of 500 apartments in An Tien project, Nha Be, HCM by 20% to VND14.5 million/SQM.

The real estate prices in certain segments are expected to fall significantly over the next 6 to 9 months, Ho Chi Minh Securities Corporation (HSC) said, citing that local developers such as Khang Dien Investment & Trading House JSC (KDH) and Sai Gon Thuong Tin Real Estate JSC (SCR) were cutting sales prices or selling the project wholesale in an attempt to repay due debts from banks.

The HSC feared that the price cuts were just the beginning, saying that the whole residential property market would be under pressure until end-Q2/2012.

However, many real estate firms were not that optimistic, worrying the pressure would last longer as the government targeted to keep annual credit growth of 15 – 17% and money supply growth rate of around 14 – 16% p.a. from now to 2015.

Nguyen Huu Cuong, chairman of Hanoi Property Club said it is hard to say when the bad time is over for property sector, it takes at least by mid 2012 to have some evidence to analyze if the market will recover.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market