Property developers sell off assets to pay debts

A property developer in District 1, which develops projects in southern Ho Chi Minh City and Binh Duong Province, last month sold off one of its projects for VND300 billion ($12.71 million), 57% lower than its valuation.

The company leader, who asked to remain anonymous, said that in May the landlord warned the company that it might have to move its headquarters if rents were not paid.

“I had to mortgage my home and car to pay for the company’s rents and some short-term debts. I also had to reduce the office space to cut costs,” he said.

Another developer in District 3 in the first quarter had to pay a VND300 billion debt and intended to use dozens of apartments as a mortgage, but the apartments were valued at VND200 billion, one-third less than three years ago.

“Even though the assets were valued less I had to mortgage them to pay debts amid a cash crunch,” he said.

In the second quarter, many premium apartments at a high-end project in District 1 were sold at a 40-50% discount, a price reduction of VND6-9 billion per unit.

Nguyen Van Dat, chairman of Phat Dat Real Estate Development, said at a recent meeting that he had to sell off many of the company’s’ and his own assets to help the company pay debts.

“I sold a VND3-trillion asset for VND2 trillion. I also sold and mortgaged many family assets to help the business through difficulties,” he said.

Property developer Quoc Cuong Gia Lai is even considering selling its hydropower power plant in the central highlands province of Gia Lai to pay debts this year, even though the plant is making large profits.

A recent report by the Vietnam Association of Realtors said that mid-2023 was the peak of difficulties for property developers and they had to sell off many assets for losses to pay debts.

They either have to do this or sit still and eventually will go under due to the lack of revenue, he added.

Tran Khanh Quang, CEO of property developer Viet An Hoa, said that the issues in the bond market and lack of access to new loans from banks, combined with declining property prices, have left companies struggling to survive.

In the last two quarters, the situation might improve if loan interest rates are lowered, he added.