Real estate credit mainly flows to businesses
As of December 25, 2024, credit in the entire economy increased by 13.82% (about 15.4 million billion VND). The leader of the State Bank of Vietnam (SBV) said that by the end of 2024, the banking industry will reach the credit growth target (about 15%). The SBV has not yet announced real estate credit growth figures for the whole year of 2024, but with a proportion of about 21 - 22% of total outstanding loans, real estate credit in 2024 is estimated to reach 3.3 - 3.4 million billion VND.
Notably, if in previous years, real estate consumer loans often grew in double digits and accounted for up to 70% of total outstanding credit, then in 2024, real estate consumer credit increased slowly, while real estate business credit grew in double digits.
Experts say this shows that real estate credit is still mainly focused on businesses and investors. Most likely, a portion of the credit is disbursed to real estate businesses facing financial difficulties with the purpose of debt restructuring when a large amount of corporate bonds mature in 2025 - 2026.
In 2025, about VND110,000 billion of bonds issued by issuers in the residential real estate group will mature. Of these, VND31,000 billion has been late in paying principal and interest. These bonds were late in paying interest or late in paying principal before the extension to 2025.
The thirst is still not quenched.
The latest financial report also shows that many "big guys" in the real estate industry are facing huge debts. Besides, another burden that is "weighing down" real estate businesses is inventory.
Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association (HoREA) said that in the first 10 months of 2024, the Prime Minister's Working Group 1435 transferred 64 projects to Ho Chi Minh City for consideration and resolution; The Specialized Working Group of the Ho Chi Minh City People's Committee held 10 meetings to consider and resolve 34 projects, of which 8 projects were resolved.
However, the more concerning issue is that there are still 86 commercial housing projects that have stopped construction or have not started construction. These are projects that are stuck in legal issues, waiting to be rescued. The longer the project is stalled, the more difficult it is for businesses to have cash flow because they have borrowed capital for the initial project establishment costs, the interest must be paid continuously, eating into the inventory but there is no product to sell.
The Chairman of the Board of Directors of a large real estate company in Ho Chi Minh City shared that although the bank agreed to finance the project, when using another project as collateral, the bank still encountered difficulties in disbursing the loan even though the legal issues were being resolved. The company could not sell half or the entire project to recover capital.
From the perspective of a financial expert, Dr. Dinh The Hien - Director of the Institute of Informatics and Applied Economics said that the cash flow of real estate and construction enterprises is continuously decreasing, even experiencing negative growth.
According to Dr. Dinh The Hien, in the cash flow statement, there are two important cash flows: From business activities and finance. Currently, the financial flow is facing difficulties due to the lack of new loans being disbursed, leading to a negative cash flow. This reflects a serious shortage of capital and a lack of coordination between the company and the bank.
Dr. Nguyen Duy Phuong, Investment Director of DG Capital, said that the new tightening regulations, especially on capital mobilization from customers, will affect the ability of enterprises to implement projects, especially those with thin capital. Although credit is prioritized with reasonable interest rates and banks actively lend, accessing this source of capital is difficult due to high requirements on project legality, leverage ratio, financial plan and debt repayment plan.
