Can Tho wants to have an airport city, what to do to avoid tasting 'bitter fruit', when will home loan interest rates decrease?

Businesses face pressure due to cash flow shortages, homebuyers wait for interest rates to cool down, Can Tho wants to build an airport city… these are the latest real estate news.

To save themselves, real estate businesses must proactively review their resources and reassess existing projects. (Source: Dan Tri Newspaper)

What should businesses do to avoid "drowning in a pile of assets"?

According to Congluan.vn, since mid-May 2022, due to various reasons such as the pandemic, market growth cycles, economic slowdown, market difficulties; and a series of tightening policies on credit and corporate bonds... the real estate market has fallen into a slump.

Interest rates remained high from the end of 2022, decreased slightly at the beginning of this year, but are still at a high level for businesses to withstand.

Rising financial costs coupled with a cash flow shortage due to unsold inventory, inability to raise capital through bonds, and failure to qualify for credit loans are causing businesses to increasingly weaken.

The prolonged economic difficulties not only affect participants in the real estate market but also lead to stagnation in a range of related industries.

Survey data from VARs' members, who are real estate service businesses, shows that if the market situation continues to be difficult, up to 23% of businesses will only be able to maintain operations until the end of Q3/2023, while 43% will be able to survive until the end of 2023.

If a timely solution isn't found, the market could very well face the closure of numerous entities, from real estate investment and development companies to real estate service businesses and brokers. Many workers will lose their jobs, negatively impacting their social security.

Recently, the government has issued a series of policies to help businesses extend or postpone debt payments. However, to save themselves, real estate businesses must proactively review their resources and reassess existing projects. They should only retain promising projects that they have the capacity to implement. They should seek investment, form joint ventures or partnerships, or sell part or all of projects that cannot be continued.

Mr. Nguyen Van Dinh, Chairman of VARs, believes that businesses need to proactively seek out customers/investors or contact professional units to support connecting with parties interested in investment cooperation or project acquisition. To reach an agreement quickly, businesses need to lower their expectations, even being willing to accept selling at a loss, because "you can't expect to make a profit even when facing difficulties."

In reality, many businesses, in their desperate attempt to survive despite insufficient resources, have driven themselves to the brink of ruin with compound interest. They end up facing enormous debts, with interest payments often exceeding the principal amount.

According to VARs' report, the mergers and acquisitions (M&A) market has been gradually heating up over the past year.

Some businesses are aggressively spending on M&A to seek opportunities to expand their markets and improve profit margins. Many groups of investors with substantial capital are looking for opportunities and are ready to invest in promising projects.

This includes the influx of capital from foreign investors that has already flowed into Vietnam and will continue to do so in the coming period. The majority of these investors are targeting projects with relatively complete legal frameworks to mitigate risks.

“This is an opportunity for investors to hold many ‘clean’ projects, which they can sell or collaborate on, creating value and benefits for both sides. It’s a way for businesses to manage cash flow to repay debts, avoiding collapse and dissolution. Or it brings in cash flow to continue implementing other projects. It prevents the loss and waste of land resources, restores production and business activities, and brings goods back to the market,” Mr. Dinh commented.

Homebuyers are anxiously awaiting interest rate reductions.

Deposit interest rates at banks have been continuously falling sharply in recent months, providing a basis for lending interest rates to "cool down". However, in reality, lending interest rates, especially for home loans to individual customers, remain high, increasing financial pressure.

According to the survey, interest rates for home loans for existing customers at Vietnam Foreign Trade Commercial Bank (Vietcombank) are around 10.7%/year; Vietnam Investment and Development Bank (BIDV) from 9.1 - 10.9%/year; Military Commercial Bank (MB) around 13-14%/year; Vietnam Technological and Commercial Bank (Techcombank) from 10-12.1%/year; An Binh Commercial Bank (ABBank) from 14.6-15.4%/year...

For new borrowers, the most favorable loan interest rate this June is 4.99% per year at Vietnam Maritime Commercial Bank (MSB). Meanwhile, Tien Phong Commercial Bank (TPBank) and Saigon Commercial Bank (SCB) are offering home loans at 7.8-7.9% per year; Orient Commercial Bank (OCB) at 8.49% per year... However, these are all preferential interest rates applied for a short period, after which the interest rate will be calculated based on market fluctuations, estimated at around 13.5% per year.

The State Bank of Vietnam's consecutive moves to lower the policy interest rate three times in less than three months, along with the sharp drop in deposit interest rates at banks compared to their peak at the beginning of the year, have created expectations that lending interest rates will also fall.

But in reality, customers still have to struggle to repay bank loans every month and continue to hope for lower interest rates. Sometimes they even feel anxious, unsure whether interest rates will fall or continue to rise.

Explaining why lending rates haven't caught up with the decline in deposit rates, a bank executive said that most credit institutions had to raise funds at high interest rates in late 2022. Therefore, lending rates need a certain time lag, with each bank making different adjustments depending on the cost of capital and its financial capacity. In particular, it's even more difficult to lower interest rates on existing loans from a time when capital costs were high.

According to the analysis team at Vietcombank Securities Company Limited (VCBS), lending interest rates are decreasing more slowly than deposit interest rates due to policy lags; moreover, the interest rate reduction is mainly concentrated in a few priority businesses and sectors.

Furthermore, the first-quarter 2023 financial reports of 27 out of 28 listed banks show that interest expenses on deposits increased sharply by more than 50% compared to the same period last year; with 9 banks experiencing increases of over 100% year-on-year. In addition, interest expenses on loans, interest payments on issued securities, etc., also increased at most banks. This partly explains why lending interest rates have not decreased as expected.

Regarding interest rate prospects, under the base scenario, SSI Securities Corporation believes that interest rates could fall by another 50-100 basis points from now until the end of the year and continue to decrease in 2024.

Can Tho wants to develop an airport city covering approximately 10,000 hectares.

According to the Can Tho City Electronic Information Portal, Mr. Tran Viet Truong, Chairman of the Can Tho City People's Committee, proposed a plan for an airport city covering approximately 10,000 hectares at the forum "Prospects for Infrastructure Investment and Economic Development in the Mekong Delta Region".

Bất động sản mới nhất. Thành phố Cần Thơ về đêm. (Nguồn: Cổng Thông tin điện tử TP. Cần Thơ)

Can Tho city at night. (Source: Can Tho City Electronic Information Portal)

Specifically, Mr. Tran Viet Truong proposed that the Ministry of Construction prioritize coordinating and advising the Government to consider and approve the investment project to upgrade and expand Can Tho International Airport to meet regional/area standards, combined with the construction of an additional port to serve air cargo transportation, in accordance with the national airport system plan. This is a prerequisite for Can Tho City to serve as the basis for planning an airport city with an area of approximately 10,000 hectares.

Can Tho currently has Can Tho International Airport, built in the 1960s with a runway measuring 1800m x 30m. Later, the runway was renovated and upgraded to 3000m long and 45m wide, ensuring it can accommodate aircraft such as the A320, A321, and similar models, connecting Can Tho with Hanoi and other localities. The passenger terminal covers an area of nearly 21,000 ^m² , serving 3-5 million passengers per year.

According to previous plans mentioned by the People's Committee of Can Tho City, the airport city plan will include an area of approximately 2,000 hectares for the construction of a center for linking, producing, processing, and distributing agricultural products in the Mekong Delta region. Priority will be given to building an air logistics system, a river port, and a central warehouse system for preserving agricultural products.

Resolving difficulties in the planning of sub-area C4 of the Bien Hoa general plan.

At a meeting with departments and agencies on local planning work last weekend, Mr. Cao Tien Dung, Chairman of the People's Committee of Dong Nai province, requested the People's Committee of Bien Hoa city to urgently coordinate with the Department of Construction to continue working with investors of projects regarding proposals to adjust detailed planning, the reasons for adjusting the C4 zoning plan and the general planning of Bien Hoa city.

At the same time, Mr. Dung instructed the Department of Construction to coordinate with other departments, agencies, and the People's Committee of Bien Hoa City to review legal regulations. In particular, attention should be paid to regulations regarding the conditions for adjusting the detailed planning of the project, ensuring sufficient proportions of green space, public works, and social infrastructure as per the previously approved plan. These contents must be finalized and reported to the Provincial People's Committee by June 12th.

Sub-zone C4 of the Bien Hoa City master plan covers an area of approximately 1,500 hectares, encompassing the entire Long Hung commune and a part of Tam Phuoc ward in Bien Hoa city, Dong Nai province. Over the past period, investors have implemented urban and residential projects in this sub-zone, such as: the Long Hung residential area project, the Dong Nai WaterFront urban area, the Aquacity urban area, and the Phuoc Hung high-end commercial and service urban area…

The revised master plan for Bien Hoa City was approved by the Dong Nai Provincial People's Committee in July 2014, and the C4 zoning plan was approved in September 2016. However, at the time of approval, the master plan and the C4 zoning plan had not fully updated the detailed 1/500 scale planning documents of previously approved projects, leading to inconsistencies and discrepancies between the plans at different levels. Due to these discrepancies, many urban development projects had to temporarily halt construction and business operations, including a project by Novaland Group.

In a letter sent to the Prime Minister last May, Mr. Dung proposed several solutions to the problems facing real estate projects in Bien Hoa City. This included a request for the Prime Minister to approve the Dong Nai Provincial People's Committee's proposal to prepare a dossier for the partial adjustment of the Bien Hoa City master plan. At the same time, the Dong Nai Provincial People's Committee acknowledged this as a shortcoming of the locality in the process of preparing, appraising, and approving the plan.

Regarding real estate project developers in the area, the Chairman of Dong Nai Province requested a full report on the current status of project implementation. The Provincial People's Committee will then compile this report and submit it to the Ministry of Construction and the Prime Minister. Regarding the conditions for selling future-built housing in the area that conform to the approved detailed planning, Mr. Dung instructed the Department of Construction to consider and process the request, allowing businesses to continue selling future-built housing in accordance with the law.

The decisive intervention from all levels of government and relevant agencies aims to quickly resolve shortcomings and difficulties, thereby restoring confidence among the people and businesses, helping to revive production and business, and contributing to socio-economic development.

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