Banks find no takers for foreclosed properties despite steep discounts

By Anh Tu   November 4, 2023 | 08:09 pm PT
Banks find no takers for foreclosed properties despite steep discounts
Office buildings and apartment blocks in Hanoi. Photo by VnExpress/Ngoc Thanh
Banks are trying to auction houses, resorts and factories pledged by defaulting borrowers, but cannot find buyers for them even after slashing prices by billions of dong (VND1 billion= $40,758).

Since the end of last year banks have been aggressively auctioning off properties like land plots, houses and villas in prime locations, large tourism properties, resorts, and factories to recover debts.

Agribank is again looking for buyers for two houses in Hanoi’s old quarter at starting prices of VND60 billion ($2.5 million) and VND34 billion, down by VND50 billion and VND26.5 billion from the first auction a year ago.

The two houses have been the subject of around 10 auction announcements so far.

BIDV has had to try for a sixth time to auction a cement factory in the southern Binh Phuoc Province, and for more than a dozen times a 1,100-square-meter plot of land in HCMC.

In October VietinBank announce the fresh auction of 20 plots of land in the southern Dong Nai Province with a starting price of VND265 billion, VND60 billion lower than three months ago.

A HCMC construction firm had used them as collateral to get loans.

Another bank lowered the starting price by VND100 billion to VND1 trillion for properties in the central Nha Trang City.

Many properties in a $1-billion tourism project related to developer Tan Hoang Minh have seen their prices slashed by tens of billions of dong from earlier auction attempts.

According to the Vietnam Association of Realtors, before auctioning off properties banks usually give borrowers three to six months to sell them themselves.

But the current property market slump makes this all but impossible since many want to sell them at high prices while prospective buyers are waiting for lower prices.

Besides, large properties put up for auction by banks have to compete with new projects being developed by companies seeking to sell them out to restructure themselves and raise funds in a tight market.

Other seized properties have legal problems making it difficult to attract foreign buyers though they like to buy Vietnamese tourism projects, according to the head of a firm in Hanoi long experience in mergers & acquisitions.

In a report sent to the National Assembly earlier this month the State Bank of Vietnam said the bad debts ratio in the real estate sector stood at 2.58% at the end of July, a sharp increase from 1.8% a year earlier, and is rising.

The association expected the ratio to increase further since the property market has yet to recover.

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