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Bank credit still plentiful for upscale real estate projects
Though the State Bank of Vietnam has sounded the alarm about overheating real estate credit, Tuoi Tre reports that commercial banks in HCM City continue to pour trillions of dong into real estate projects.
On July 23, Sacomreal, the real estate arm of SacomBank, signed a strategic cooperation agreement with Lien Viet Bank. Lien Viet will provide loans to Sacomreal to fund the company’s huge projects and its own clients’ purchases of the products at Sacomreal-invested projects.
The Nguyen Cu Trinh project is to be a complex of offices, trade centre, apartment, hospital, school and entertainment area in the centre of HCM City. Early this year, its developer, Bitexco, signed a syndicated 2.65 trillion dong loan contract with Agribank and Vietcombank to fund site clearance.
A trillion dong is about $56 million.
In early July, Vietinbank, the insurer Bao Viet, Gia Dinh and Asia Commercial Bank signed a contract to provide 1.2 trillion in capital to the Ho Ban Nguyet-Crescent Mall shopping centre project invested by Phu My Hung Joint Venture. The project has the total investment capital of $200 million.
Vietcombank will provide 950 billion dong to Him Lam Company to fund an 800 apartment project.
Real estate bubble?
Economists agree that most of the recent big contracts provide funding for high-grade projects. The problem, as they see it, is that banks are pumping capital to upscale apartment block and trade centre projects, a relatively depressed market segment, instead of to projects that will provide housing for low income earners, which are now very thirsty for capital.
Dr Vu Thanh Tu Anh, Director of Research at the Fulbright Economics Teaching Programme in Vietnam, said that enterprises which make products for export, create jobs and earn foreign currencies are short of capital. However, they can’t get capital from banks because the banks are concentrating in the real estate sector.
Le Hoang Chau, who heads the HCM City Real Estate Association, confirms a ‘hot increase’ in outstanding loans to the real estate sector. He notes that the State Bank has warned of a ‘real estate bubble.’ Chau doubts one will take shape – buyer’s demand is now low. He said that the biggest worry now is that the low demand and abundant supply will lead to weak liquidity and loan payment defaults.
VietNamNet, TT
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