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Tuesday, June 25, 2024

Real estate sector still in turmoil

By N.Tan

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HCMC – The real estate sector has yet to come out of the doldrums as the number of realty firms exiting the market has lately risen significantly, according to the Ministry of Construction.

The ministry in reviewing the real estate market in the second quarter of 2023 noted that the number of newly established real estate firms dropped by over 61% versus the year-ago period. Meanwhile, the number of realty firms exiting the market surged by over 30%.

Many firms have been forced to delay or temporarily halt their projects, with some reducing their workforce by around 60%.

The Ministry of Construction has identified three main obstacles impacting the property sector. Firstly, complicated legal procedures, particularly related to land pricing methods and inappropriate land use plans, are posing challenges for many realty firms.

Secondly, there is a lack of synchronization in coordination among different departments and local authorities, which is hindering the smooth implementation of numerous real estate projects. Notably, some investors are facing difficulties in collaborating effectively with authorities in crucial aspects such as land clearance, compensation, pricing, and resettlement processes.

Thirdly, real estate businesses are encountering difficulties in accessing bank loans and mobilizing capital through corporate bonds and other sources, and some are grappling with mounting debt pressures.

Additionally, fluctuations in foreign exchange rates, rising oil prices, and escalating construction material costs are further impacting production and overall business activities in the sector.

The challenges faced by the real estate industry require concerted efforts from all stakeholders to address and mitigate the current turmoil.

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