Real estate businesses start the race from the bottom

The real estate market has entered the “dark zone” with a fierce screening process. Some steadfast businesses have started the race from the bottom.

Get up

Before the Tet holiday, a series of real estate businesses surprised everyone when they announced that their profits in 2023 had improved significantly compared to the previous year, even recording extraordinary profits. Most of these results were achieved thanks to efforts to restructure assets and investment portfolios.

For example, in the fourth quarter of 2023, Novaland Group recorded revenue of nearly VND 2,028 billion. Financial activities had positive results, bringing in double revenue, up to about VND 1,825 billion. Profit from investment cooperation contracts alone recorded more than VND 1,000 billion, the rest was mainly profit from securities trading and loans. Thanks to that, Novaland's after-tax profit was more than VND 1,642 billion, an increase of nearly 13 times over the same period. This is the highest quarterly profit since the fourth quarter of 2020.

In 2023, Novaland achieved nearly VND 4,759 billion in revenue and nearly VND 685 billion in profit after tax. Compared to the full-year plan, profit after tax was 3.2 times higher than the set target, mainly due to debt restructuring and cost optimization.

Similarly, Phat Dat Real Estate Development Joint Stock Company also successfully overcame the upswing thanks to restructuring activities. In the fourth quarter of 2023, thanks to recording financial revenue of up to VND 421 billion, 25.7 times higher than the same period in 2022, Phat Dat reported a profit, with a profit after tax of nearly VND 283 billion (the same period lost more than VND 267 billion).

The fact that some businesses are trying to recover and start making profits again is a good sign, although in reality, the real estate market has only just passed the most difficult period and has not fully recovered.

It is known that this financial revenue mainly comes from Phat Dat transferring all 99.8% of ownership at Phat Dat Industrial Park Investment and Development Joint Stock Company (PDI) to Phat Dat Holdings Company Limited (earning a profit of 415 billion VND). Thanks to this financial revenue and part of other revenue from investment and service provision activities, Phat Dat has completed the goal of completely handling all outstanding bonds in December 2023.

Several other real estate companies have also recorded positive business results from project transfer activities. For example, thanks to the handover of products at the Westgate complex (Binh Chanh, Ho Chi Minh City), An Gia Group recorded a profit of VND175 billion in 2023, 9 times higher than the previous year and exceeding the plan by 75%.

Pivot to enter new cycle

According to the Vietnam Association of Realtors (VARS), 2024 is likely to be the final year of the real estate market's "overcoming obstacles". In essence, this change is not development, but an effort to move towards the starting line, instead of existing in a negative state as in the recent past.

This will be the basis and foundation for the market to prepare for a new development cycle, which is more stable, sustainable and effective. Although the changes in legal regulations have not been applied immediately, they will be a positive signal for entities to place their trust and lift their spirits.

In fact, comparing the difficult cycles of real estate, many experts believe that the current situation is much better than before. In 2024, the market will continue to screen for risky issues, especially bonds. In this context, the opportunity to turn the tide is still open for many businesses with a solid financial foundation and a long-term product development strategy.

For example, using the affordable housing segment as the main growth axis has helped Nam Long Group maintain stability. Specifically, in 2023, Nam Long recorded net revenue of more than VND 3,181 billion, of which revenue from real estate business was VND 2,905 billion. Nam Long's bright spot in 2023 was the profit from joint ventures and associates reaching more than VND 418 billion, while the previous year it was only nearly VND 25 billion. With a low leverage ratio and a large amount of goods ready for sale, Nam Long quickly seized the opportunity when the market recovered, even when purchasing power did not meet expectations.

In a recent analysis report, SSI Securities Company estimated that in 2024, Nam Long could record revenue of VND6,860 billion, up 133% over the same period, and after-tax profit of parent company shareholders of VND1,030 billion, up 136%. This is thanks to the recovery roadmap of the real estate market and especially Nam Long's products suitable for people with real housing needs. This is the segment that is assessed to have the first recovery potential in the real estate market.

Similarly, with Phat Dat Real Estate Development Joint Stock Company, after overcoming the "severe illness", Mr. Bui Quang Anh Vu, General Director, said that in 2024, the Company will not invest widely, but only focus on developing projects that suit market demand to achieve the highest absorption rate, focusing on creating cash flow to become more and more stable.

Currently, this company has at least 4 projects eligible for sale with total expected revenue of more than 40,000 billion VND, including: Cadia Quy Nhon Project (Binh Dinh), Binh Duong NTMK (Binh Duong), Bac Ha Thanh (Binh Dinh), Serenity Phuoc Hai ( Ba Ria - Vung Tau ).

In the first month of 2024, the groundbreaking of the Thuan An 1 High-rise Complex Housing Project in Binh Duong also clearly demonstrated the company's determination to promote the development of product lines suitable to market demand. This is also a project expected to bring in large cash flows for Phat Dat in 2024.

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