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Property sector urged to improve quality to overcome crisis
Although the real estate market is encountering great difficulties, deputy minister of construction Nguyen Tran Nam told Tuoi Tre that businesses in this sector have to ‘rescue’ themselves by improving quality rather than waiting for government support.
He said the tightening credit policy was the main obstacle that challenged the real estate sector.
As ordered by the government to reduce credit to the non-production sector (Including securities, personal consumption and real estate), many banks have refused to lend money to real estate firms, forcing them to the verge of bankruptcy.
The strict credit policy has also prevented customers from getting bank loans for their property purchasing, thus worsening the property market. “The property market is currently relying too much on bank credits, so when this capital source was tightened, the market would be immediately hurt,” he said.
He added that some banks just stayed firm and refused every demand for loans without considering the fact that some projects really needed capital to expand production. “Some businesses were reportedly denied bank loans even when they needed capital to build plants and workshops on the grounds these constructions belonged to the real estate sector (Non-production).”
Although the situation has made a slight improvement as some banks now accept lending to real estate companies, he added, the property sector should find another way for capital mobilization other than mere reliance on bank credits.
He suggested exploiting the huge capital from customers, who are willing to buy gold at record high prices but hesitant in investing in real estate. “It’s the product quality that matters,” he explained. “The real estate firms have to improve their product and service quality to win customers’ trust to make use of this huge source of capital.”
As for short-term solution to overcome the current crisis, he suggested real estate firms cooperate by merging or by transferring projects to foreign companies.
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