VN developers adopt new survival strategies
Play
The State Bank of Vietnam has loosened its grip on real-estate loans recently in a long-awaited move that some industry insiders say may help revive the stagnant market.
The central bank excluded some types of real-estate loans from the list of “non-production” loans – a credit category that commercial banks have been specifically ordered to control this year.
As a result, restrictions have been lifted on loans for home repairs, home purchases, and home construction but eligible borrowers are limited to wage earners only. Developers can also apply for bank loans as long as they are developing housing projects for low-income groups or other residential projects that can be put into use by January 1, 2013.
Following the new policy, many banks plan to increase lending to the real estate sector.
However, many real-estate developers do not have enough time to wait for low-cost capital sources. Many of them say bank loans are still beyond their reach while their projects struggle to move on.
They also say that their loan applications have been rejected by banks for myriad reasons.
Some banks have said they have to wait for guidance from the central bank in offering loans to real-estate businesses. Some either refuse to lend, or give the excuse that they are restructuring their business debts. Some banks require borrowers to have a stable source of revenue to be eligible for loans.
To survive, many real-estate enterprises are trying out various measures to sell their products in order to get back the money for paying old bank loans and continuing incomplete projects.
The Hoang Anh Gia Lai Group, for instance, recently announced it is likely to cut prices of apartments in some projects by 50 per cent.
Chairman Doan Nguyen Duc said that once prices reach reasonable levels, people would certainly buy. “Low prices play a role in saleability, and can bolster demand in a gloomy market,” he said.
Under the HAGL group’s plan, bout 2,000 apartments of 60 to 90 square metres will be sold at half their original prices.
Following this trend, many other real-estate developers have drawn up plans to wholesale their apartments to investors or cut property prices in order to recover capital and pay back bank debts.
