Property sector slows down amid unfavorable market conditions

By Vu Le July 1, 2022 | 08:31 pm PT

Buildings are seen in Ho Chi Minh City. Photo by VnExpress/Quynh Tran

Many property developers are slowing down their activities due to lack of access to credit, legal challenges and falling demand.

During the second half of this year Quoc Cuong Gia Lai would slow down investment and wait for property policies to be streamlined, CEO Nguyen Thi Nhu Loan told shareholders at the annual general meeting Wednesday.

The property sector faced many challenges in the last two years due to the Covid-19 pandemic, and has not been able to recover this year due to a shortage of credit as banks have used up their credit growth quotas, she said.

Many projects have been stalled for three years due to the contradictions between the housing, land and real estate trading laws, and it is unclear when these would be resolved, she said.

"The stalling of projects means developers cannot sell them and therefore their cash flows are blocked. The market is burdened by a shortage of capital."

The head of a property developer based in Thu Duc City, who asked not be identified, said his company achieved the worst second quarter sales in the last five years.

The plummeting demand has forced it to stop marketing campaigns, he said.

"We do not expect much this year, just waiting for this difficult period to be over and be ready for another race next year."

The CEO of a developer focused on the western Ho Chi Minh City said the company has cut the revenue and profit targets it had set earlier this year by half.

"We are cutting costs and hope to bounce back in the last quarter, but there is no cause for optimism yet."

Property was the only one of nine service sectors in HCMC to see a decline in the first six months. It declined by 5.82 percent.

Economist Dinh The Hien said at a recent forum that it is not an ideal year for the real estate sector due to continuing legal problems, rising inflation and falling demand.

Su Ngoc Khuong, senior director at real estate consultancy Savills Vietnam, said the high housing prices and limited sales of the first six months could continue for the rest of the year.

"The sector needs a streamline solution to help improve cash flow and clear legal blockages."