Thailand
Vietnam: Nearly US$10 billion of bad debts mortgaged by realty assets
The Hanoitimes – Hundreds of real estate projects can revive through the merger and acquisition (M&A) if non-performing loans (NPLs) can be settled, according to Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association.
Some 60-70 percent of the total VND300 trillion (US$13.21 billion) NPLs, or over VND220 trillion (nearly $10 billion) are using real estate projects as collaterals from now until 2020 at banks, Chau revealed at a recent conference.
The bad debt settlement, through M&A, therefore can bring hundreds of real estate projects back to the market, he said.
Chau said that the local real estate market will face difficulties in being access to bank loans this year, however, it will also benefit from foreign investment capital inflows.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, the real estate industry ranked third in Vietnam’s FDI attraction in the first two months of this year with total registered capital of $312.1 million, accounting for 9.3 percent of the country’s total registered capital.
Ho Chi Minh City remained the leading in FDI attraction with $44.25 billion, representing 13.7 percent of the country’s total capital.
Last year, the real estate industry also ranked third in the country’s FDI attraction, reporting a total capital of $3.05 billion.
To better develop the real estate market, experts said that the government should acknowledge the significant role developers play in the real estate market and in city planning.
Dr Huynh The Du of Fulbright University Vietnam said that the government has a limited role to play in setting the scene and developers should be the ones to lead the market as they know what projects need to be built and where.
Experts said that the city’s urban planning is not done in an effective way at the moment. Even the person who approves housing projects does not really have a clear idea of what they are doing.”
Yet to some extent developers have to rely on the master plan, they said, adding that the government has the role of regulating the market.
Prof Richard Peiser from the Graduate School of Design at Harvard University in the United States agreed that developers have a big role to play.
“Often city leaders think they are the ones that lead the market and can set the context and the playing field, but developers are the ones who take the risk and someone has to take the risk.
“Developers are the key because they are the ones who tidy up the land, bring the capital and have the responsibility of having the project built. They are at the centre of making it happen.”
But he also said one of the key ingredients for a vibrant and competitive real estate market is proper regulation by the government.
To promote the development of the real estate market, the government should also try not to limit the participation of FDI investors since they bring capital, promote competition and improve design standards in the market, he said.
Asked how local developers can compete with international players who are from more developed markets if the government opens the doors wide to FDI investors, he said: “Real estate is a very local business and local developers always have better information and certain natural advantages.”
Maybe in big projects local developers would be somewhat at a disadvantage, so it is appropriate that the government requires a certain amount of legislation to better monitor the market, he said.
Some protection is good but in general it should not keep out foreign investors, he added.
Chau said that the local real estate market will face difficulties in being access to bank loans this year, however, it will also benefit from foreign investment capital inflows.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, the real estate industry ranked third in Vietnam’s FDI attraction in the first two months of this year with total registered capital of $312.1 million, accounting for 9.3 percent of the country’s total registered capital.
Ho Chi Minh City remained the leading in FDI attraction with $44.25 billion, representing 13.7 percent of the country’s total capital.
Last year, the real estate industry also ranked third in the country’s FDI attraction, reporting a total capital of $3.05 billion.
To better develop the real estate market, experts said that the government should acknowledge the significant role developers play in the real estate market and in city planning.
Dr Huynh The Du of Fulbright University Vietnam said that the government has a limited role to play in setting the scene and developers should be the ones to lead the market as they know what projects need to be built and where.
Experts said that the city’s urban planning is not done in an effective way at the moment. Even the person who approves housing projects does not really have a clear idea of what they are doing.”
Yet to some extent developers have to rely on the master plan, they said, adding that the government has the role of regulating the market.
Prof Richard Peiser from the Graduate School of Design at Harvard University in the United States agreed that developers have a big role to play.
“Often city leaders think they are the ones that lead the market and can set the context and the playing field, but developers are the ones who take the risk and someone has to take the risk.
“Developers are the key because they are the ones who tidy up the land, bring the capital and have the responsibility of having the project built. They are at the centre of making it happen.”
But he also said one of the key ingredients for a vibrant and competitive real estate market is proper regulation by the government.
To promote the development of the real estate market, the government should also try not to limit the participation of FDI investors since they bring capital, promote competition and improve design standards in the market, he said.
Asked how local developers can compete with international players who are from more developed markets if the government opens the doors wide to FDI investors, he said: “Real estate is a very local business and local developers always have better information and certain natural advantages.”
Maybe in big projects local developers would be somewhat at a disadvantage, so it is appropriate that the government requires a certain amount of legislation to better monitor the market, he said.
Some protection is good but in general it should not keep out foreign investors, he added.
Source: http://www.hanoitimes.vn/economy/2018/03/81E0C342/nearly-us-10-billion-of-bad-debts-mortgaged-by-realty-assets/