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Government sets up task force to remove challenges for real estate sector

VIETNAM, November 21 – HCM CITY – Prime Minister Phạm Minh Chinh has ordered a task force to be formed to analyze and help remove the challenges facing the real estate sector.

The task force will be led by Minister of Construction Nguyen Thanh Nghi, Deputy Minister of Construction Nguyen Van Sinh and Deputy Governor of the State Bank of Vietnam Dao Minh Tu.

The task force consists of senior officials from the ministries of construction, planning and investment, natural resources and the environment, and public safety, and the industries of banking, finance, according to a decision by Deputy Prime Minister Lê Văn Thành.

It aims to remove obstacles for real estate businesses in Hà Nội, HCM City and other provinces.

The real estate sector plays a major role in the country’s economy, contributing 11 percent of the national GDP. It also has organic relationships with other fields and creates many job opportunities.

However, the sector has recently faced several problems such as capital shortages and low liquidity, which have caused many projects to be postponed.

In the context of banks restricting lending, companies have only one option left, which is to issue new bonds to pay for the previous issue, experts said.

However, authorities continue to investigate and punish real estate and bond fraud while credit quotas remain limited, which has caused investors to lose confidence in the industry, leading to a large sell-off as there are no buyers.

Many real estate companies had to borrow money from various sources at high interest rates or even sell some of their assets.

At a recent meeting between the government office and representatives of the real estate industry, Lê Hoàng Châu, chairman of HCM City Real Estate Association (HoREA), said a number of real estate companies face the risk of declining liquidity and may have to make painful decisions to survive.

Many real estate developers are also scaling back their business, as seen by investment or construction delays, he said.

They stopped developing new projects, issuing new bonds or launching initial public offerings, he added.

Property developers have also reduced their workforce, some by up to 50 percent, according to Châu.

Experts said a large amount of maturing corporate bonds due in the final months of the year and 2023 and 2024 is putting huge pressure on issuers, which are mostly real estate businesses.

A recent report on the corporate bond market by VCBS Securities Company showed that in the fourth quarter of 2022, there are about VNĐ85 trillion of bonds issued by banks and real estate companies maturing. The volume of corporate bonds maturing in 2023 and 2024 is estimated at VNĐ790 trillion.

For real estate companies, the data from HNX also showed that hundreds of billions by the end of the year copper of bonds issued by property companies will expire.

Experts said the challenges in the real estate sector are expected to last until 2024 as capital shortage, low liquidity and an expected global economic recession cast a shadow over the sector. — VNS

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