Unblocking capital flow for the real estate market

Businesses are facing cash flow problems.

Mr. Tran Van Binh, Vice Chairman and General Secretary of the Vietnam Real Estate Brokers Association, believes that besides legal aspects, capital is a major factor affecting the health of entities participating in the real estate market. Therefore, unlocking capital for the Vietnamese real estate market is a crucial key and a great driving force for the development of the real estate market in Vietnam.

Regarding the role of real estate in the economy , Associate Professor Dr. Dinh Trong Thinh, senior lecturer at the Academy of Finance, stated that real estate plays a very significant role in the economy, acting as a bridge connecting various industries and markets within the real estate value chain, which includes 35 related sectors and fields.

Real estate activities have a spillover effect of 0.5-1.7 times in the economy. The four major related sectors are construction (accounting for 6.2% of GDP), tourism (1.02% of GDP), accommodation (2.27% of GDP), and finance and banking (4.76%) in 2022. These four sectors alone had an impact on 14.25% of GDP. Furthermore, real estate is one of the 20 first-level economic sectors, ranking 9th in terms of value in 2022.

According to recent data from the Foreign Investment Agency, Ministry of Planning and Investment , as of December 20, 2023, the real estate business sector ranked second in attracting foreign capital with a total investment of nearly US$4.67 billion, accounting for over 12.7% of the total registered investment capital, an increase of 4.8% compared to the same period.

According to Associate Professor Dr. Dinh Trong Thinh, in recent years, the development of the real estate market has mainly relied on bank credit, and capital from corporate bond issuance is also becoming an increasingly important source of funding for real estate market development. However, in 2022, the proportion of capital from corporate bond issuance decreased significantly in the overall capital structure for development.

Associate Professor Dr. Dinh Trong Thinh, Senior Lecturer at the Academy of Finance, shared his insights at the event.

The past year, 2023, was a difficult one for the real estate industry. The government and relevant agencies and ministries worked very decisively and with high determination to restore the market.

Nearly 20 consecutive and rapid actions taken by the government have contributed to building confidence and strength in the market and among participating entities.

Among these, Resolution No. 33/NQ-CP dated March 11, 2023, is considered the most significant signal, providing direction and guidance. Increasingly, the mechanisms and policies from the Government are becoming more closely aligned with the actual needs of the market and businesses. This demonstrates a keen observation and attentive listening to every market development.

"Despite receiving many positive signals, the market has not been able to rebound due to the sharp decline in capital flows over a long period, many real estate businesses facing difficulties, and stalled projects. Above all, the shortage of supply and the 'buy low' mentality are causing disruptions in the real estate market supply chain, affecting the development of many industries and the overall GDP for the year," Associate Professor, Dr. Dinh Trong Thinh observed.

Some recommendations for unlocking real estate capital.

Accordingly, in the current context, further diversifying and improving channels for mobilizing real estate investment capital is one of the main policy priorities to support real estate recovery. Associate Professor Dr. Dinh Trong Thinh believes that several recommendations need to be fully implemented, focusing on three major issues.

Firstly, regarding the disbursement of public investment funds, the role and responsibility of the head of each agency in this process must be emphasized. Difficulties in project commencement procedures should be addressed, and investment documents and procedures should be prepared promptly.

Next, allocate public investment funds early to ministries, sectors, and localities, and quickly adjust prices according to market prices. With some raw materials increasing in price, businesses are awaiting price adjustments from the authorities.

Accelerate land clearance and investment preparation, resolve obstacles in some localities and projects facing difficulties with material sources, affecting progress, volume of work, and disbursement of funds.

“Foreign-invested projects need to be urgently reviewed and revised. Projects funded by ODA require a lengthy adjustment and revision process, leading to delays in construction progress, so their legality and reasonableness need to be reviewed and checked,” Associate Professor Dr. Thinh added.

Secondly, regarding credit funding, it is necessary to quickly, seriously, and flexibly implement the directives of the State Bank of Vietnam to enable lending based on cash flow and lending according to contracts of real estate businesses.

Commercial banks are stepping up the review and appraisal of projects and contracts to enable lending based on cash flow and contract terms; corporate bond issuance needs to continue monitoring the actions of businesses to promptly implement changes and adjustments so that mechanisms and policies are appropriate to the capacity and financial situation of businesses, including real estate businesses.

Thirdly, regarding attracting FDI capital under the conditions where the global minimum tax rate of 15% has officially come into effect, to attract FDI into the real estate sector, it is necessary to consider innovating measures to support FDI enterprises in accessing investment procedures, incentives in reducing investment costs, in land clearance, and in recruiting workers.

At the same time, it is necessary to promote the digitalization of the activities of state management agencies, build a comprehensive data warehouse to minimize access and appraisal costs, and shorten the investment decision-making process.

NAM ANH

Source: https://www.nguoiduatin.vn/khoi-thong-dong-von-cho-thi-truong-bat-dong-san-a644632.html