Real estate weathers the storm.

"In over 20 years in real estate, I've never seen a period as difficult as this," a business owner exclaimed to the writer. This statement partly reflects the hardships faced by businesses and individuals working in the real estate sector. Yet, they remain resilient, finding ways to overcome these dark days.

Ms. Pham Thi Nguyen Thanh, General Director of Dat Xanh Real Estate Services Joint Stock Company (Dat Xanh Service), stated that the company is currently one of the largest real estate brokerage firms, holding approximately 33% of the market share. However, Dat Xanh's large size doesn't mean it doesn't face difficulties. The company is only slightly less burdened than others thanks to its accumulated capital from 20 years of operation in the market.

According to Ms. Thanh, the recent period has been a "great flood" for real estate brokers, and no one has truly "successfully survived" during this time. Of course, even in adversity there is opportunity, and businesses have implemented various solutions to weather the "winter."

“ Our system spans from North to South. Before the credit crunch, our company had about 70 subsidiaries. When the market became difficult, we regularly and continuously restructured our entire system, from the group level down to the member companies, to ensure that we only retained the healthiest ‘cells’ to overcome the difficult period,” Ms. Thanh said.

This company leveraged its experience during the COVID-19 lockdown to develop emergency scenarios. When credit tightened in the market, the company immediately implemented a series of scenarios at a higher level than those used during the pandemic.

The company adjusted and narrowed its business sectors, scale, geographical areas of operation, and product lines, while cutting back and streamlining inefficient departments. Even departments that were performing well but were not essential had to prioritize resources for more urgent needs.

According to Ms. Thanh, the company has focused on optimizing its financial and human resources. The company has implemented a series of transformations, shifting from a model heavily reliant on fixed costs to one focused on variable costs.

“ We are determined to adapt quickly in order to survive because we are all in a boat weathering the storm. We must remove whatever is making the boat heavy to keep it as light as possible,” Ms. Thanh shared.

In terms of personnel, the company has streamlined all departments and units. Each employee is required to handle 2-3 tasks, even completely different ones. The company has also continuously streamlined its brokerage staff. At its peak, Dat Xanh Service paid salaries to over 7,000 sales staff, in addition to more than 10,000 collaborators. However, during the restructuring, the company cut more than 60% of its staff to streamline the system.

“ We’re not cutting out all employees; we’re shifting from fixed costs to variable costs. We’re paying salaries to 40% of the staff, and the remaining 60% will either leave the company or continue selling its products as freelancers, ” Ms. Thanh shared.

Therefore, Dat Xanh Service's operations are still ensured thanks to its core staff remaining with the company. The company continues to pay salaries, maintain benefits, and reward outstanding individuals. However, if an employee fails to meet performance standards, they will be forced to leave the company.

The CEO of Dat Xanh Service stated that the company is also optimizing its cash flow management. For a brokerage firm, the main source of income is brokerage fees. However, in recent times, brokerage firms have been struggling due to developers delaying fee payments.

“ Our system works with over 200 investors, which is why we have a lot of outstanding fees. Currently, we are focusing all our efforts on recovering these debts to bring the money back; the amount we need to collect is approximately over 1,000 billion VND ,” Ms. Thanh said.

In addition, businesses are also focusing on solutions to generate new revenue streams, diversify products and services, expand markets, and broaden their customer base.

Ms. Dang Phuong Hang, General Director of CBRE Vietnam, shared that during the 30 years the company has been present in the Vietnamese market, it has witnessed many changes and fluctuations. A prime example is the 1997-1998 crisis, a major financial crisis in Asia that severely impacted the real estate market. Similarly, the period of 2008-2009 saw a prolonged "freezing" of the real estate market.

" Thailand faces more challenges than Vietnam in terms of customer base, but it doesn't encounter the same legal difficulties, access to capital, or financial resources as Vietnam ," Ms. Hang said.

According to Ms. Hang, real estate companies in Thailand are continuously selling properties overseas to find customers. Initially, the results have been relatively positive.

Tourists from Russia and China have returned to Thailand to buy real estate, with Phuket being a particularly popular destination.

In Vietnam, CBRE's real estate sales team has also faced many difficulties recently. The company has had to review all issues within the organization.

First, there's cost management; the company holds meetings almost every week to review its cost management. Second, there's product review. If a product sells well but has unclear legal status or problematic investors, collecting payments becomes very time-consuming. Therefore, the selection of products to sell is also carefully considered.

In addition, CBRE has also expanded into the secondary market due to the large customer base with genuine housing needs. Transactions in the secondary market are relatively stable. CBRE's main clients are foreigners, coming from Asia, Europe, the US, and the Middle East.

" Foreign investors typically don't face the same legal or financial difficulties as in Vietnam. They are only concerned with whether the investment is safe and whether it will yield good returns," Ms. Hang said.

According to Ms. Hang, in recent times, foreign buyers have shown less interest in real estate products in Ho Chi Minh City due to rising prices. However, foreign buyers have shown more interest in properties in the North due to more attractive prices.

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), in addition to solutions that businesses are applying such as restructuring, staff reduction, and cost optimization, expanding into new markets is a very important task at present.

Some projects have stalled, remaining dormant, so brokers don't need to pursue them further; instead, they should focus on developing new markets. Mr. Dinh believes that the demand for investment in Vietnam is still very high. However, this demand is currently dormant, waiting for the right opportunity to surge strongly. Once this demand is unleashed, it will rise dramatically.

“ I’ve seen some Vietnamese real estate businesses venturing into the international market. They’re connecting with domestic brokers to bring investors to overseas markets. Recently, during a presentation on business plans for overseas markets in Quang Ninh , one company immediately secured 100 collaborators to implement this plan ,” Mr. Dinh shared.

According to Mr. Dinh, millions of people worldwide are currently working remotely online. These people frequently search for affordable travel destinations where they can both relax and work. With the current low room rates in Vietnam, tourists from the US, Europe, South Korea, Japan, and other countries are willing to come to experience our country. The key is for travel agents to connect with these customers.

Ms. Pham Phuong Hang, General Director of CBRE Vietnam, commented that this is the time when real estate brokers need to improve quality, standardize skills, increase customer trust, and elevate the status of the brokerage profession.

“ Brokers are the first people clients interact with in a transaction. If brokers behave unprofessionally and fail to build trust with clients, the transaction will fall apart, even if the product is good and the developer is reputable. Brokers are the ones who restore confidence in clients and in the market,” Ms. Hang said.

Sharing Ms. Hang's viewpoint, Mr. Pham Lam, Chairman and CEO of DKRA Vietnam, stated that improving brokerage quality is extremely important today. He has worked as a broker for nearly 20 years in Ho Chi Minh City and witnessed many ups and downs in the market.

Mr. Lam observed that the real estate market faces unique challenges at every stage. Even during periods of market "prosperity," problems and consequences often follow.

According to Mr. Lam, despite the market difficulties, he remains confident and optimistic. His company has shifted its business strategy from a "belt-tightening" approach to a "hardship and perseverance" one. This is a more challenging and dangerous approach. However, the company is not making a hopeless effort, but rather striving persistently, patiently, and methodically.

According to Mr. Lam, this is also the time for individuals and businesses participating in the real estate market to "toughen" themselves, to see if they truly love the profession and if they have chosen the right career. This is also the time to "filter out" those who are not passionate about the profession. However, those who love the profession and strive will receive good opportunities.

Mr. Lam believes that this is also a good time for real estate businesses to review the difficulties customers are facing, stand by them, and build trust. When the market improves, customers will not turn their backs on those who are dedicated and enthusiastic.

“ Back when I was a salesperson, there were customers I nurtured for five years before they finally bought from me. I always gave them advice or support whenever they needed it. They might not buy immediately, but at some point, if they felt the product suited them and their budget, they would make the purchase,” Mr. Lam confided.

According to Ms. Pham Thi Nguyen Thanh, General Director of Dat Xanh, to become a successful real estate broker, one must have truly excellent knowledge. Besides understanding real estate law, brokers must also have knowledge of economics, politics, society, and possess good communication skills, understanding customer psychology, etc.

Brokers must keep up with trends to engage clients when they want to discuss a topic of widespread interest. Without sufficient knowledge and expertise, it's very difficult to stay in the profession, especially in the current climate. A good broker is someone with profound knowledge and is not just a "middleman" as they are often called.

In the past, brokers could find clients just by sitting in one place; now, they can't find clients even if they search everywhere. This has caused some brokers to lose confidence in themselves and their profession. The most important thing for brokers to stay in the profession at this time is to believe in themselves.

" I believe that the market goes up and down like a sine wave. As the saying goes, 'after the storm comes the calm.' This is the time for each business and individual to reassess their strengths and weaknesses and acquire the necessary knowledge and skills, " Ms. Thanh shared.

Ms. Pham Phuong Hang, General Director of CBRE Vietnam, stated that investors currently have ample funds and housing prices in Vietnam are cheaper compared to Hong Kong, Singapore, or the Middle East. However, investors remain somewhat hesitant due to existing obstacles. The government and relevant agencies have proposed solutions to address these bottlenecks, but these policy solutions have not yet had a significant impact on the market.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), shared that as early as mid-2022, the real estate market showed signs of an impending "storm" or crisis. Therefore, VARS made strong recommendations for changes to legal regulations.

“ We have proposed and participated in suggesting amendments to the Land Law, the Real Estate Business Law, the Housing Law, the Investment Law… We have compiled and summarized the obstacles and overlaps in these regulations, and from there, we have come up with solutions to resolve them,” Mr. Dinh said.

According to Mr. Dinh, VARS is also urgently reviewing the difficulties of each project to resolve outstanding issues. The association has also proposed solutions to the Government to remove obstacles for businesses.

These proposals were heeded by the Government, and a preferential credit package of 120 trillion VND was issued. This is an important credit package to support investors and buyers of social housing who urgently need capital.

According to Mr. Dinh, since the beginning of 2023, the State Bank of Vietnam has adjusted interest rates five times, and after each adjustment, the State Bank has to monitor developments to make appropriate adjustments. However, Mr. Dinh believes that current deposit interest rates are high, reaching 8% per year. Meanwhile, real estate business only achieves a profit margin of 8-10%.

" No one would be foolish enough to invest in real estate during these difficult times. I think deposit interest rates need to fall below 5% for there to be any hope of investors returning to the real estate market," Mr. Dinh shared.

According to the Chairman of VARS, in the past, the organization has also made many recommendations regarding legal issues for tourism and resort real estate because investors put money into the project but are not recognized as the owner. Investors cannot prove they are the owners of the resort properties, so they cannot conduct transactions or sales, leading to a loss of confidence in this segment.

Recently, the Government issued Decree No. 10 on recognizing ownership rights for hotel apartments, resort apartments (condotels), office-based residences (officetels), resort villas, etc., that meet the legal requirements. This is a very positive change and aligns with the needs of the people and businesses.

Over the past few months, the real estate market has shown positive signs as major players have restarted their projects.

Novaland has restarted the Novaworld Phan Thiet project (Binh Thuan province), Novaworld Ho Tram project (Ba Ria Vung Tau province), and The Grand Manhattan project (Ho Chi Minh City). Hung Thinh Group has also restarted the Merry Land Quy Nhon project (Binh Dinh province) with the Marina Districk subdivision.

Phat Dat Group also continues to implement projects such as Cadia Quy Nhon, Bac Ha Thanh (Binh Dinh); Binh Duong Tower (Binh Duong); Serenity Phuoc Hai (Ba Ria Vung Tau) and the 39 Pham Ngoc Thach project (Ho Chi Minh City).

Representatives from the aforementioned businesses stated that recently, investors and customers have shown more interest in the projects compared to the beginning of the year. Real estate transactions have also become more active than before.

A representative from Hung Thinh Group shared that the company has gradually resumed business. Over the past month, Hung Thinh has secured several dozen units for customers. Although this number is still quite modest compared to the group's scale, hope is gradually being rekindled.

According to Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, the real estate interest index nationwide increased slightly by 1% in the second quarter of 2023. In Ho Chi Minh City, transaction demand is gradually recovering well in the apartment and private house sales segments.

“ Searches for apartments in District 10, Tan Phu, Binh Tan, Binh Chanh District, and District 9 (Thu Duc City) increased by 5-9%. Demand for apartment rentals in Ho Chi Minh City also increased by 8-17%, and interest in and searches for land plots increased by 6-7% compared to the end of 2022,” Mr. Quoc Anh said.

According to Mr. Quoc Anh, stable signals from the macroeconomic environment are helping the real estate market gradually recover. Currently, inflation is under control, and interest rates and exchange rates are also gradually stabilizing.

The challenges remain immense.
According to research by DKRA, in May 2023, the supply of apartments, townhouses, and villas in Ho Chi Minh City decreased by 92% compared to April, with liquidity reaching only around 5%. This indicates that the market is entering an extremely challenging phase.
Overall, in the second quarter of 2023, the residential real estate market in Ho Chi Minh City and its surrounding areas continued to show relatively positive developments in both supply and consumption. Market demand increased slightly compared to the first three months of the year, but remained low compared to the same period in 2022. Forecasts indicate that the market will show signs of improvement in the third quarter of 2023, but a dramatic surge in the short term is unlikely.

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