Prepayments flatline in property development

The prepayment for projects under development, which is the amount of money that customers pay in advance for homes that are being built, was mostly unchanged at the majority of the 10 property developers with the largest unsold inventory in Vietnam.

Prepayment will be recorded as revenue when the project is completed and customers receive their homes.

Industry leader Vinhomes, however, was an exception, with a VND49.2 trillion ($2.06 billion) recorded as prepayment by the end of June, down 20% from the beginning of the year.

In the fourth quarter last year, Vinhomes’ recorded VND62.2 trillion in prepayment, a new peak, after opening sales of its new projects Vinhomes Ocean Park 2 and 3 in Hanoi's neighboring Hung Yen province.

Novaland recorded VND17.15 trillion in prepayment by the end of June, up 7.5% from the beginning of the year.

In the third place, Nam Long recorded VND3.35 trillion in prepayment, up 2.4% from the beginning of the year.

CEO Tran Xuan Ngoc said at a meeting last month that sales were very slow in the first quarter but had improved in the second.

The company managed to record a post-tax profit of VND200 billion in the first six months after handling over to its customers two projects in Ho Chi Minh City and Long An Province.

Other developers that recorded a prepayment value of around VND1 trillion include An Gia, Dat Xanh Group and Hoang Huy. Their figures barely changed from last year.

Over the first three months this year, prepayment in the property industry dropped 5%, according to brokerage VnDirect.