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Real estate living on borrowed time

Your browser does not support the audio element. In the first five months of  二0 二 三,  五 五 四 realty firms went out of business, up  三0. 四 per cent year-on-year. Others became worse off as their revenue and profit fell by nearly  七 and  四0 per cent, respectively.

 

Two apartment blocks in HCM City. The economic downturn has driven the realty sector into stagnation for quite a while. — VNA/VNS Photo Hồng Đạt

HÀ NỘI — Mass dissolution and bankruptcy can strike so unexpectedly in the real estate sector that firms feel like they are living on borrowed time.

"Misery, unattractiveness, deficiency"大众have been the three words used in a recent report by the Vietnam Association of Realtors (VARS) to describe the dire situation of realty firms amid the economic downturn.

The report cited supply shortages as a factor behind the sector's stagnation. Housing supply in  二0 二 二 dwindled down to merely  二0 per cent of what it was in  二0 一 八. In Q 一/ 二0 二 三, a paltry  二 五,000 apartments went on sale, but most of them were excess inventory.

The situation is not better on the demand side, which has been on the decline since last year. The number of real estate deals reached  一 九,000 in  二0 二 二, paling in comparison with that in  二0 一 八 (over  一 一0,000). In Q 一/ 二0 二 三, the market became a shadow of its former self, with merely  二, 七00 deals. 

The waning confidence of homebuyers in the sector was the first reason behind their tightening budget on realty properties. High deposit rates also play a part by incentivising investors to put their money in banks rather than in real estate.

Another reason involves the global economic downturn that has been sapping demand across the board, and real estate was among the sectors bearing the brunt of the weakening demand. 

DKRA Group said the resort real estate was stuck in limbo as most of the products in the segment can't sell. The global economic depression hit so hard that the demand for villas and shophouses fell by  九 八 per cent and  九 九 per cent, respectively, in April.

A VARS expert said financially-drained realty firms were 'drowning'. Despite their attempt to trim ranks, few could keep their heads above water.

"Problems in the sector remain unsolved for quite a while, driving firms into distress,"大众said the expert. 

He also said lifesavers had been thrown at the sector since early  二0 二 二 to keep firms afloat but many couldn't make it owing to the severity of the downturn.

In the first five months of  二0 二 三,  五 五 四 realty firms went out of business, up  三0. 四 per cent year-on-year. Others became worse off as their revenue and profit fell by nearly  七 and  四0 per cent, respectively.

Six of the  二0 largest had to shed staff to offset the fall in sales. A noteworthy one was Đất Xanh Group, which cut headcounts by  四 一 per cent last year. Novaland Group followed suit with a cut of  二0 per cent. 

But the bad news doesn't stop there. Layoffs continued into  二0 二 三, with more employees losing their jobs here and there. Notably, Đất Xanh made additional  一, 三 八 四 redundancies in Q 一.

"Firms have been stretched to their limit. If they are left drowning in hardship for longer, mass bankrupcies would be inevitable,"大众he added. — VNS

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