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Addressing property overhang challenge

A recent survey conducted by the Board for Private Sector Development Research (Board IV) has unveiled concerning statistics regarding the real estate sector. In the first quarter of 2023, real estate enterprises grappled with an astonishing average inventory duration of 5,662 days, with one company facing a staggering 54,334-day inventory period. This alarming trend has sparked apprehension among industry experts, with Board IV expressing worry that, at the current sales pace, certain enterprises may require over 15 years to clear their inventory. Moreover, an in-depth analysis by Board IV scrutinized the financial reports of 1,579 listed companies across three Vietnamese stock exchanges from 2018 to June 2023, revealing a significant decline in revenue since mid-2022, particularly within the real estate and construction sectors. These findings also highlighted the vulnerability of Vietnamese enterprises due to their slim equity profiles and heavy reliance on borrowed capital. Shrinking orders, difficulties in raising funds via bonds and stocks, and limited access to bank loans have posed immediate cash flow management challenges. Companies burdened with high debt-to-equity ratios are especially struggling in the current economic climate, with the construction, real estate, and building materials sectors being particularly affected. Construction firms are grappling with a debt-to-equity […]
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