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Saturday, June 15, 2024

Real estate firms struggle with huge debt

By Nguyen Tan

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HCMC – The real estate sector is currently grappling with a significant bond debt, totaling nearly VND350.9 trillion as of March 2024, according to the Ministry of Finance.

A detailed report covering the period from 2015 to 2023 showed that 330 domestic real estate companies issued over VND726.3 trillion of bonds via private placement. These bonds had an average term of 3.69 years and carried an average coupon rate of 10.15% per annum. During this period, four firms also ventured into international markets, issuing bonds worth a combined US$2.18 billion.

The ministry’s review also highlighted that the existing tax policy on real estate transactions in Vietnam had been comprehensive, addressing all relevant revenue streams during the said period.

There has been a steady rise in personal income tax revenue from real estate transfers, starting in 2017. Notably, there was a 19.82% increase in 2018, an 11.44% increase in 2019, a 12.22% rise in 2020, and a 30.4% increase in 2021. The most substantial jump occurred in 2022, with an increase of 64.34% compared to the previous year.

Audits conducted by the ministry at 19 real estate firms resulted in 13 companies being fined, with recommendations for additional contributions to the state budget totaling VND255.7 billion. The audits also uncovered financial irregularities amounting to VND999.8 billion.

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