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Tuesday, July 23, 2024

One-fifth of real estate exchanges at risk of shutdown – VARS

The Saigon Times

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HCMC – Around 20% of real estate exchanges are facing the threat of dissolution or bankruptcy, with an additional 40% barely managing to sustain operations with minimal staffing, according to a market report released on August 28 by the Vietnam Association of Realtors (VARS).

The report highlights that the remaining property trading platforms, while displaying some level of resilience, are still grappling with challenging market conditions.

Dwindling revenue streams and concerns about penalties resulting from late payments of taxes and social insurance premiums have further strained the financial health of the industry.

Despite the Government’s efforts to support the struggling sector, challenges persist across the board. The survey conducted by VARS involved over 500 real estate companies and provided insights into various segments of the real estate market, including project developers (11%), service providers (60%), and diversified businesses (29%).

The survey also revealed a mixed reception to recently implemented policies, with 43% of respondents reporting favorable impacts of policy changes introduced since the beginning of 2023.

These policy changes have had positive effects on the real estate supply. However, for 57% of the firms, the impact of these policy changes remains moderate, indicating the challenges that the industry still faces on the path to recovery.

Around 70% of the respondents said they continue to struggle with accessing funds due to high interest rates, unresolved debts, and legal barriers. On the other hand, 30% of the surveyed firms said that the policies have had a positive impact, particularly those related to bond issuance. With the enforcement of Decree 08 and other measures by the State Bank of Vietnam, the corporate bond market has seen improvement.

The real estate sector ranked second in terms of the total value of corporate bond issuance during the first seven months of 2023, accounting for 33% with over VND26 trillion.

This development signals a potential market rebound, as many debtors have managed to extend their payment terms. However, while extending debt repayment timelines offers temporary relief, it does not address the underlying challenges faced by real estate companies, as noted by VARS.

The survey also reflects diverse responses to local government efforts. Almost half of the respondents acknowledged proactive measures taken by local authorities to ease market tensions. 14% have already experienced tangible outcomes from these actions, especially those operating projects in HCMC, Hanoi City, Danang City, and Binh Thuan Province.

However, a concerning 36% of the respondents found that local authorities limited their engagement to information dissemination without concrete support for business operations.

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