Excess inventories hinder real estate market growth

More than 60 real estate firms listed on HCMC HOSE and Hanoi HNX stock exchanges have confirmed that they have excess inventories worth over VND83 trillion (USD4 billion).

Inventories have increased 6.69% compared to the end of 2011. Currently housing inventories account for 45.84% of othe total assets of these enterprises.

However, 69.4% of all cash is in the hands of the six biggest companies. Revenues during the second quarter were insufficient to cover interest, payments for contractors and other expenses; revealing the reality that most of the enterprises don't have enough cash to operate.

In order to be able to pay debts and continue working, the property enterprises have to reduce their inventories and wrap up their non-core investments.

Excess inventories that have accumulated in the last three years threaten the market's balance. In some companies, the ratio of inventory to assets has reached 70-90%.

VnMedia

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