The Vietnam real estate market has never received as much support as it is now, since the Government launched several policies to "ice-break" the market. A huge injection of capital is expected to be pumped into the market to warm it up.
Real estate enterprises must win back customers' confidence
At the "Reviving resources for real estate" conference recently held in Ho Chi Minh City, Mr Nguyen Tran Nam, Deputy Minister of Construction, said that the current "frozen" real estate market results from the lack of vision, insufficient controlling resources, and lack of long-term strategy by real estate enterprises for the last few years.
Without a long term strategy, many real estate enterprises went bankrupt when the government squeezed credit to rein in inflation. According to Ho Chi Minh City Real Estate Association (Horea), during 2011, over 90 percent of real estate enterprises in Ho Chi Minh City went bankrupt. There are now more than 20,000 unmarketable apartments, according to the latest figures.
Some enterprises have launched attractive promotion programmes which, however, are still not working. "The reason is not because there are no customers, or they do not want to buy or do not have enough money to buy, in fact, people retain huge amounts of money. It is because they have lost confidence in enterprises, so they do not purchase. In order to regain customers' confidence, enterprises must insure their abilities by delivering land and houses on time, completing infrastructure, and maintaining committed quality," said Deputy Minister Nguyen Tran Nam.
Along with that, real estate enterprises need to restructure their products, focusing on segments with real demand and high liquidity, strengthening communication to introduce products, attracting customers with high demand for housing. Sharing about this issue, Mr Nguyen Manh Ha, Head of House and Real Estate Market Management Department, Ministry of Construction, said: For the past time, real estate products have been imbalanced: lack of low priced small apartments; redundancy of luxury apartments which are highly priced, and suitable only for the rich.
Enterprises need to reorganize their businesses, re-filter the market range, work out the right market segment, improve quality, etc. Furthermore, the inter-connection between the 4 players – namely investor, banker, materials supplier and customer – needs to be intensified. Capital, human resources management, market forecasting, long-term planning, and information transparency are all part of the remedy to cure, revive and develop the market.
Efforts to save the market
According to Dr Le Xuan Nghia, former Vice Chairman of National Financial Supervision Commission, the Government has never paid so much attention to the real estate market before. Consequently, the Government is striving to bailout the market by issuing policies such as Official Document 8844/NHNN-CSTT dated November 14th 2011 related to the extension of housing loans, purchasing house by income, and borrowing on projects that will be completed in 2012. Afterwards, on February 2nd 2012, the State Bank of Vietnam issued a directive on loosening mortgage loans; allowing banks to grant loans to projects that will be completed after 2012; withdrawing mortgage loans from discouraged ones. Especially, the most crucial movement was giving financial packages to support enterprises and the market such as reduction of VAT, corporate income tax, land rent tax and land use tax, and exemption of overdue loan fees. They are considered important milestones that point toward the development of the real estate sector in the near future.
Deputy Minister Nguyen Tran Nam also said that the Government has put real estate into a preferential group because the sector plays a very important role in economic development. It is directly related to other industries such as cement, steel, building materials, and interior furnishings. Therefore, there is a cause-effect range: if the real estate market "dies", many other sectors will "die" as a result. Moreover, among sectors related to the real estate market are among the ones with the highest export and import values.
However, despite being supported by policies, enterprises will not recover if their bad loan issues are not solved. Because only when capital is accessible can unmarketable products be freed up and investment restructured. Addressing the problem, Mr Nam said the Government will spend VND120 trillion for public investments, obtain VND38 trillion from government bond issuance, and VND17 trillion from other resources. Therefore, it is expected that there will be nearly VND200 trillion available by the end of the year.
Mr Nghia also said that the Government has set the target credit growth rate at 12 percent in 2012. However, the rate has been negative so far this year. Therefore, in the next 6 months, credit growth rate must be sped up to 2 percent a month (equivalent to VND300 trillion). Together with VND200 trillion, from now to the end of this year, there will be VND500 trillion available for the market.
Reported by Ha Linh | VCCI News
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