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Tuesday, June 18, 2024

Real estate sector still in distress

The Saigon Times

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HCMC – The real estate sector is not yet out of the woods as the number of newly established real estate firms and their registered capital has dropped to less than half of the figures recorded in the first half of last year.

The number of enterprises entering the market and the newly registered capital in the first half of 2023 has plunged by a staggering 59% and 54%, respectively, compared to the same period last year, according to the Business Registration Management Agency at the Ministry of Planning and Investment.

The number of real estate enterprises exiting the market has been steadily increasing, with a rise of over 40% compared to the same period in 2022, the highest among 17 sectors and industries.

A market report released by the Vietnam Association of Realtors described the real estate market as a person on the verge of drowning, indicating that it is gradually losing strength and sinking further.

The Ministry of Construction has also acknowledged that the real estate market is still grappling with difficulties arising from decreased supply, sales slump, and poor cash flow.

These challenges faced by real estate enterprises are in stark contrast to the rapid growth in market entrants observed in the first half of 2021, which was nearly 45% higher than in 2020.

Despite the challenging business landscape, there are some optimistic signs, with around 21,000 businesses being newly established or returning to the market in June.

Throughout the first half of the year, over 113,000 newly established businesses re-entered the market, averaging around 19,000 companies per month. However, around 100,000 businesses pulled out of the market during the same period, averaging 16,600 firms. Although this represents a decrease compared to previous months, it still shows optimism amidst unfavorable business conditions.

However, the average registered capital per enterprise in the first six months is around VND9.3 billion, the lowest in five years, while additional registered capital is down by over 48% compared to the same period last year.

The agency attributes these challenges to low demand and escalating inventory and raw material prices. It suggests that relevant ministries and authorities should deploy support policies and intensify efforts to promote sales and help businesses overcome market obstacles.

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