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Firms flee collapsing real estate market
Businesses are making a rapid retreat from the property market as they seek to avert potential losses from its bleak outlook.
A number of firms and enterprises have withdrawn capital from the market, while adjusting business strategies to focus on more optimistic growth areas.
The Viet Nam Construction and Import-Export Corp (Vinaconex) last month announced it had completed selling its entire 25 per cent stake (3.75 million shares), in urban developer Vinaconex – Hoang Thanh.
The stake, thought to be worth VND$1.5 trillion (US$71.43 million), could have grave implications for the ParkCity urban project in Ha Noi, where Vinaconex – Hoang Thanh Co was one of the investors. The project is said to have seen almost no development since construction began two years ago.
At an investor meeting last month, VinaCapital officials said its property investment fund, VinaLand, wouldn't make new investments in the coming time but would concentrate on developing current projects, improving profits and repaying capital to investors.
This fund had already withdrawn capital from 10 projects, worth a combined total of over $357.6 million, Lao Dong (Labour) reported.
Other major companies which have completely retired from the real estate playground include Baker Kinh Do and steel maker Hoa Sen, according to the newspaper.
Hoang Anh Gia Lai chairman Doan Nguyen Duc said the real estate sector no longer produced the huge profits seen during its 2006-07 boom years.
"The question now is whether enterprises can survive," said a property business owner in HCM City. "Most would be happy to gain one-tenth of the profits they earned in the past."
Many business leaders said property companies should now save themselves by restructuring products and reducing prices.
According to Lao Dong, Hoang Anh Gia Lai has cut prices for apartments at the Thanh Binh project in HCM City's District 1 by one-third to a half. Meanwhile, the Hoa Binh Real Estate Trading Floor has lowered prices for Babylon apartments, which previously cost VND14.9 million ($709) per square metre.
Hoang Anh Sai Gon Real Estate Co Ltd has also offered cheaper prices for Quang Thai apartments, which before were being sold at around VND1 billion ($47,600) per unit.
The majority of people seeking accommodation are still unable to afford these kinds of properties, the newspaper said, raising the question: Should the country rescue the property market now?
"Let market prices continue to fall until supply meets demand, just then we will have a healthy property market," it mused.
vietnamnews
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