The number of property developers and brokers that dissolved or temporarily ceased operations surged 30% and 61% year-on-year, respectively, in the first three months of 2023, announced the Construction Ministry.
The number of new firms established decreased by 63%, Hoang Hai, head of the ministry’s Housing and Real Estate Market Management Agency, told reporters Monday.
Between 30% and 50% of property trading floors had to close or suspend operations, and 60-70% of brokers stopped working or switched professions.
“This is a challenging period for businesses that are not competitive, but an opportunity for others to operate more professionally and develop more sustainably,” Hai said.
Many real estate projects have been delayed or even halted as property businesses find it prohibitively difficult to access bank loans and corporate bonds.Increased lending interest rates and foreign exchange rates, as well as rising gasoline and construction materials costs are also crushing less stable firms.
According to the Ho Chi Minh City Real Estate Association, one of the biggest challenges facing real estate companies is the possibility of their debts being classified as bad debts, which could mean they wouldn’t be able to access new loans, even if they have feasible projects and secured assets.
To survive this difficult time, property developers and brokers have had to streamline their business plans, restructure debts, and downsize investment and production.
One April 12, the Government issued a decree supporting the failing real estate market.The decree allows real estate businesses in financial difficulties to reschedule the repayment of debts and loan principal, as well as to restructure debt groups.
Projects built to meet people’s needs for occupation, not for investment, and those with high liquidity created to meet people’s real needs and not just built for investment purposes will be granted favorable access to loans.
Such projects include social housing, offices for rent, and real estate units for production and industry.
Projects that meet certain legal conditions and have potential buyers will also benefit from easier access to credit.
Some experts have predicted that such measures will help the real estate market begin a true recovery in the last quarter of this year.
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