Supervising capital mobilization in property sector a priority: minister

By Hoai Thu   October 31, 2022 | 07:59 am PT
Supervising capital mobilization in property sector a priority: minister
Buildings in District 1, Ho Chi Minh City as pictured in October 2022. Photo by VnExpress/Quynh Tran
Mobilizing capital for the property sector through bond or stock issuances needs to be supervised to ensure industry transparency, Ministry of Construction Nguyen Thanh Nghi said Monday.

There has been speculation and manipulation in the market, prompting the need for authorities to control the capital mobilization of property companies, he told the National Assembly.

"We need to monitor the issuance, investment and service provision of corporate bonds, especially private issuances of property companies or credit organizations related to the industry."

Authorities need to pay attention to companies with large bond issuances at high coupon rates even though they are making losses and have no guarantees, Nghi said.

Bond issuance is a major channel for raising capital among property developers, with the other channels being bank loans and advanced buyer payments. Property developers contribute only 15-30% of capital needed for each project, and they do not have mid- and long-term funding to help the market develop with stability, he said.

"Property prices, especially for houses, apartments and land, have been surging more than income growth," Nghi said, adding that this brought difficulties for low-income residents in urban areas and industrial parks to access housing.

This group, however, should be prioritized, and credit organizations need to provide loans toward social housing and affordable housing projects.

The property sector contributes about 11% of annual GDP. Last year, the sector attracted $2.6 billion of foreign direct investment, or 8.6% of the total.

Outstanding loans in the sector hit VND777,235 trillion ($31.27 billion) by the end of August, down 0.94% from two months earlier.

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