Real estate businesses want to reduce interest rates and keep debt groups unchanged

The main problem lies in capital flow.

At the national online conference "Removing difficulties and promoting the safe, healthy and sustainable development of the real estate market" held on the morning of February 17, Mr. Nguyen Van Sinh, Deputy Minister of Construction, said: Real estate businesses have reported great difficulties in accessing and borrowing capital from banks and credit institutions. Lending interest rates increased in the final period of 2022.

Real estate businesses want to reduce interest rates and keep the group the same, picture 1 — Mr. Nguyen Van Sinh, Deputy Minister of Construction. (Photo: VGP)

Many real estate businesses have recently issued a huge amount of bonds (tens, hundreds of thousands of billions of VND) and have a repayment deadline at the end of 2022 and 2023. This is a huge difficulty and pressure for many real estate businesses in the coming time.

Some businesses are also under pressure to repay bonds early to investors for many reasons, including changes in policies to control corporate bond issuance.

Some regulations such as the regulation that only "professional securities investors" can invest in and buy corporate bonds limit businesses' ability to raise capital.

The handling of violations by a number of organizations and individuals in recent times related to the issuance of corporate bonds has affected the psychology of investors,...

In particular, recently, a lot of inaccurate and unofficial social information about finance, credit, bonds, stocks, and handling of violations at some enterprises has caused confusion among investors, leading to fear, waiting, and suspending investment in the real estate sector and switching to other investment channels.

“Businesses cannot sell products, have no cash flow, have difficulty in liquidity; negatively affecting the market,” said Deputy Minister Nguyen Van Sinh.

Therefore, Mr. Sinh recommended that the State Bank flexibly and synchronously operate financial and monetary policy tools, unblock credit flows to serve socio -economic development; perfect policies to maximize the mobilization of domestic and foreign financial resources for housing and market development.

Real estate businesses want to reduce interest rates and keep the group the same, picture 2 — Enterprises have proposed that the Government and the State Bank allow banks to extend, postpone and maintain debt groups for real estate projects for 2-3 years. (Photo: NV)

Manage appropriate credit limits; extend principal and interest payments for real estate businesses facing difficulties, including real estate projects serving consumption, production, industry, tourism, resorts, etc.); at the same time, create conditions for businesses, home buyers and investors to access credit sources.

Regarding bond capital, Mr. Nguyen Van Sinh proposed to study and amend legal regulations to remove difficulties and obstacles and create conditions for enterprises to mobilize capital on the stock market and issue bonds; Control capital mobilization activities on the stock market to avoid speculation, manipulation, and price inflation; Monitor compliance with laws on issuance, investment, and provision of services on corporate bonds.

Novaland proposes to choose Aqua City as a pilot to remove difficulties

Meanwhile, Mr. Bui Thanh Nhon, Chairman of the Board of Directors of Nova Real Estate Group Joint Stock Company (Novaland), proposed that the National Assembly and the Government consider directing the State Bank of Vietnam to continue supporting real estate enterprises. During this period, enterprises wish to be supported in terms of mechanisms.

Specifically, Novaland recommends: The Government and the State Bank issue a regulation allowing banks to extend, postpone and maintain the debt group for real estate projects for 2-3 years to help businesses have time to wait for the market to recover and complete the project's legal procedures.

“Timely assistance is very important to prevent 10-20% of the economy's outstanding debt from being converted to bad debt,” said Mr. Nhon.

Real estate businesses want to reduce interest rates and keep the group the same, picture 3 — Mr. Bui Thanh Nhon, Chairman of the Board of Directors of Nova Real Estate Group Joint Stock Company. (Photo: VGP)

Enterprises petitioned the Prime Minister to direct the removal of legal obstacles for projects of enterprises nationwide. This deadlock has lasted for many years but has not been resolved.

Novaland hopes that the Prime Minister will direct the selection of the Aqua City satellite urban area in Dong Nai province as a pilot project so that the Prime Minister's Working Group and the locality can resolve difficulties within 1 month.

Currently, Novaland has 25 trillion VND frozen at commercial banks. Of which, according to the credit conditions, more than 10 trillion VND will be eligible for release when Novaland completes some legal procedures. If this issue is resolved within the next 1-2 months, Novaland will have capital to operate normally.

Interest rates have increased quite rapidly since the end of last year, with some loans having interest rates increasing by nearly 30%. If this increase continues, projects currently at the old interest rate will become loss-making at the new interest rate.

Therefore, businesses propose that the Government, the State Bank as well as commercial banks take measures to reduce deposit interest rates, thereby quickly reducing lending interest rates to restore the market.

As for commercial banks, businesses have accompanied the banks for many years, now businesses are facing difficulties due to high interest rates, commercial banks should also reduce profit margins to accompany and support businesses.

The amendment to Decree 65 was drafted in early December 2022 but has not yet been issued. If the draft is issued, it will help remove many difficulties for businesses as well as the bond market, said Mr. Bui Thanh Nhon. Not only real estate businesses, but also commercial banks and people who are bondholders hope that these amendments will be issued soon.

He also suggested that government media agencies have a strategy to support rebuilding market trust in the direction of supporting "real people, real work" businesses that are creating good products for society, helping the market develop in a sustainable direction.

The Government's strong involvement in thoroughly resolving legal issues for projects will help reduce product costs, create a clear investment environment to attract FDI capital, help develop urban areas, and increase budget revenue.

Source