VNRE - State Bank’s tight credit policy on realty market is causing difficulties for investors. Mobilizing FDI capital or allowing realty projects to be mortgaged at foreign commercial banks are recommended for the market at this moment.
Different points of view
Evaluating difficulties in realty domestic market in the Conference “What to do with realty market in 2011”, Dr Vu Dinh Anh, Deputy Chairman of Institute of Market and Price Science (Ministry of Finance) said, the current realty market’s status is rather the same as that in 2008. The only difference is in 2008, the market was rescued by Governmental Stimulating Aid but there has been no positive sign for the market so far.
Explaining for State Bank tightening credit on realty market, Mr Anh said, since it’s easy to appear bubble phenomenon in realty market and stock market, it’s necessary to tighten credit. Currently, commercial banks spend about 23 percent of credit on the market, which need seriously re-considering about its necessity.
According to Mr Anh’s calculation, tightening credit on realty market will cause this market a loss of US$5 billion in 2011 since at that time realty total lending outstanding decreases to about 16 percent. The question is in such current difficulty, where to find US$5 billion to maintain the market’s stability as well as realty projects on progress.
From an expert’s point of view, Mr Anh warned investors to be cautious at the moment since lessons from 2008 are still helpful.
Prof Dang Hung Vo – Deputy Minister of Natural Resources and Environment expressed the same opinions with Mr Anh, macro-economic difficulties in the economy are directly influencing realty market, which makes less transactions in the market than previous years due to lack of capital. Investors meet difficulties calling for capital for projects. However, the market decreasing by 30 to 50 percent as in 2008 hardly occurs in 2011.
Mr Pham Thanh Hung – Deputy Director of Cengroup, however, had a quite different view that despite many obstacles in macro economy, there are still many positive sighs in domestic realty market. It can be realized that there have been some waves which, however, are not clear; I disagree with some people thinking that the market are so somber.
In terms of difficulty, only Ho Chi Minh City market is in difficulty, Hanoi still witnesses market’s development since supply for citizens are in hand of secondary investors and realty price in Hanoi is two to three folders higher than in Ho Chi Minh City.
So little capital coming in
Generally, according to economic and realty experts capital coming in realty in 2011 will be much lower than 2010 especially domestically funded projects. To restrain difficulties, according to experts, investors should share investment, partners should assist each others to handle financial issue as well as exploit the other’s strengths, foster appealing foreign direct investment (FDI) etc.
Dr Dang Hung Vo added, currently most countries in the region and in the world all allow realty companies to mortgage their own projects to foreign commercial banks. If this is applied in Vietnam, many difficulties of realty enterprises will be handles when domestic credit is in trouble. The reason is domestic banks do not have plentiful credit capital. Mr Vo said, Vietnam should study and issue legal framework for this regulation since according to the agenda of joining WTO, Vietnam must comply all commitments of WTO. Vietnam has allowed foreigners to use lands but not procedures for land using of foreigners.
Also according to Mr Vo, the Government has once piloted allowance of realty projects mortgaging in foreign commercial banks before but the law did not allow and there has been no specific procedure for this matter.
Another solution is to foster housing paper trade to find out capital for the market. In order to do so, investors themselves have to make their projects public, transparent, raise consumers and individual investors’ trust.
Mr Pham Thanh Hung said, despite market’s transactions partially slowing down, profit value remains with conscious investors who know how to distribute their finance reasonably. Little “waves” in the market so far have been opportunities for investors to make profit. Market changes in the direction of “much trading, little selling”, which will be chances for investors with much capital to find favored realty products at reasonable prices.
Reported by Luong Tuan | VCCI
Different points of viewEvaluating difficulties in realty domestic market in the Conference “What to do with realty market in 2011”, Dr Vu Dinh Anh, Deputy Chairman of Institute of Market and Price Science (Ministry of Finance) said, the current realty market’s status is rather the same as that in 2008. The only difference is in 2008, the market was rescued by Governmental Stimulating Aid but there has been no positive sign for the market so far.
Explaining for State Bank tightening credit on realty market, Mr Anh said, since it’s easy to appear bubble phenomenon in realty market and stock market, it’s necessary to tighten credit. Currently, commercial banks spend about 23 percent of credit on the market, which need seriously re-considering about its necessity.
According to Mr Anh’s calculation, tightening credit on realty market will cause this market a loss of US$5 billion in 2011 since at that time realty total lending outstanding decreases to about 16 percent. The question is in such current difficulty, where to find US$5 billion to maintain the market’s stability as well as realty projects on progress.
From an expert’s point of view, Mr Anh warned investors to be cautious at the moment since lessons from 2008 are still helpful.
Prof Dang Hung Vo – Deputy Minister of Natural Resources and Environment expressed the same opinions with Mr Anh, macro-economic difficulties in the economy are directly influencing realty market, which makes less transactions in the market than previous years due to lack of capital. Investors meet difficulties calling for capital for projects. However, the market decreasing by 30 to 50 percent as in 2008 hardly occurs in 2011.
Mr Pham Thanh Hung – Deputy Director of Cengroup, however, had a quite different view that despite many obstacles in macro economy, there are still many positive sighs in domestic realty market. It can be realized that there have been some waves which, however, are not clear; I disagree with some people thinking that the market are so somber.
In terms of difficulty, only Ho Chi Minh City market is in difficulty, Hanoi still witnesses market’s development since supply for citizens are in hand of secondary investors and realty price in Hanoi is two to three folders higher than in Ho Chi Minh City.
So little capital coming in
Generally, according to economic and realty experts capital coming in realty in 2011 will be much lower than 2010 especially domestically funded projects. To restrain difficulties, according to experts, investors should share investment, partners should assist each others to handle financial issue as well as exploit the other’s strengths, foster appealing foreign direct investment (FDI) etc.
Dr Dang Hung Vo added, currently most countries in the region and in the world all allow realty companies to mortgage their own projects to foreign commercial banks. If this is applied in Vietnam, many difficulties of realty enterprises will be handles when domestic credit is in trouble. The reason is domestic banks do not have plentiful credit capital. Mr Vo said, Vietnam should study and issue legal framework for this regulation since according to the agenda of joining WTO, Vietnam must comply all commitments of WTO. Vietnam has allowed foreigners to use lands but not procedures for land using of foreigners.
Also according to Mr Vo, the Government has once piloted allowance of realty projects mortgaging in foreign commercial banks before but the law did not allow and there has been no specific procedure for this matter.
Another solution is to foster housing paper trade to find out capital for the market. In order to do so, investors themselves have to make their projects public, transparent, raise consumers and individual investors’ trust.
Mr Pham Thanh Hung said, despite market’s transactions partially slowing down, profit value remains with conscious investors who know how to distribute their finance reasonably. Little “waves” in the market so far have been opportunities for investors to make profit. Market changes in the direction of “much trading, little selling”, which will be chances for investors with much capital to find favored realty products at reasonable prices.
Reported by Luong Tuan | VCCI
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