More than 30 billion USD worth of real estate 'covered' in real estate

The more you work, the more you lose.

According to statistics from the Vietnam Association of Realtors (VARS), the overall absorption rate of the entire market in 2022 reached 17% compared to the real estate transaction volume in 2018. By the first quarter of 2023, the overall absorption rate of the entire market reached about 11%, equivalent to more than 2,700 transactions, down more than 50% compared to the same period in 2022.

Meanwhile, data from DKRA Group shows that by the end of May, real estate purchasing power had decreased by over 95% compared to the same period last year. This situation has lasted from the beginning of 2023 until now.

Mr. Pham Lam, Chairman of the Board of Directors of DKRA Group, said that the real estate market in Ho Chi Minh City and neighboring areas in the first quarter of 2023 is still "miserable", entering an extremely challenging period due to related factors such as: legal deadlock, investors are not bold enough to launch products due to weak demand. "March and April this year witnessed the scene of buyers not returning to the market strongly. Meanwhile, although real estate credit has very strong instructions on reducing interest rates, bank leaders said that they cannot immediately reduce lending interest rates, leading to few real estate buyers," said Mr. Pham Lam.

The leader of Tran Anh Real Estate Company shared that although the company's project in Chau Doc City ( An Giang Province) has a red book for each plot, it has not sold a single product for the past 4 months. The more the company advertises to sell its products, the more it cannot sell them because customers think the products are unsold, the products are being dumped, so they do not buy. Advertising to sell products is hard, not advertising is even harder because then no one knows about it.

"If we don't build, customers will think we're bankrupt, and if we build and can't sell, the money buried in the project will also die. To have such a beautiful project, it takes 10 years to complete, not just 1 or 2 years. The project can't be sold, but every month, just for this project, the company has to spend billions of dong. The market and businesses are currently suffering in many ways," he said.

Despite many efforts and support from businesses and the Government , the market is still almost "frozen" in transactions.

TLR Real Estate Company, the investor of a project in Nhon Trach District ( Dong Nai ), after 2 months of opening for sale, only earned 12 billion VND, not enough to cover sales costs. Although knowing that the more it works, the more it loses, the company is forced to run to maintain its apparatus. "The plan is very modest, but the sales results are still 'super modest'. Currently, the company is working with sales agents to find new business plans, hoping that things will be better in the future," said the leader of this business.

Meanwhile, PL Company is implementing many projects in Lam Dong province, but since the beginning of the year, it has only been able to sell an average of 1 plot of land per month. To maintain operations, the company is selling a series of projects and plots of land at low prices, but it is not easy.

Mr. Lanh, the owner of a famous real estate brokerage company in Ho Chi Minh City, admitted that he had cut almost all of his sales staff, keeping only "soldiers". To survive, he invested in beer bars and coffee shops. One fine day, visiting the Buôn cafe area in Vinhomes Central Park (Thu Duc City, Ho Chi Minh City), we saw Mr. Lanh busily serving coffee to customers with a sad look.

30 billion USD "covered"

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, weak liquidity is due to many reasons: the majority of buyers lack cash flow when the economy still has many challenges, high interest rates, difficult credit access, idle cash flows still stay in savings channels. The most worrying factor is that buyers have lost confidence in the real estate market.

Although real estate businesses and real estate brokers themselves have been constantly trying and making efforts to survive and escape the difficult situation, it is very difficult. The Government and state management agencies have also been very close, issuing a series of policies and directives such as Decree 08, a credit package of 120,000 billion VND, a credit package of 40,000 billion VND supporting 2% interest rates, reducing interest rates, establishing a working group to remove difficulties for real estate... However, up to now, the market has not been able to "thaw", transactions are still going down and the difficulties of businesses are getting more and more severe.

Hundreds of "covered" projects cause serious waste

The sharp decline in transactions has also caused real estate companies' revenue to "plummet". To date, more than 90% of businesses have recorded a decrease in revenue in the first quarter of 2023 compared to the same period last year. Of these, up to 39% of businesses have seen a decrease in revenue of 20-50% and 61% have seen a decrease of over 50% compared to the same period. Some businesses with less than 100 employees have even seen a decrease in revenue of up to 70-80%.

"Currently, statistics show that there are thousands of 'shelved' projects across the country waiting for adjustment, review, and approval with a total value of about VND800,000 billion (USD30 billion). If these projects are reactivated, they will create a market and boost the economy very well. However, solutions to overcome difficulties are very slow, so the risk of death on the pile of assets of enterprises is very high," said Mr. Dinh.

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