Dr. Cấn Văn Lực

Could you please tell me your opinion about the real estate market, including the problem of capital?

As a highly pervasive important economic sector, with a close connection to the financial market, the development of a safe, efficient and sustainable real estate market is always the Government's top concern.

In particular, a connecting quadrilateral among "banking - securities - insurance - real estate" is available, because they are closely related. Accordingly, the banking industry spends about 20% of its capital on lending to the real estate sector with 60-65% of the credit guarantee assets being real estate, the capitalization of listed commercial banks accounts for 24.4% of capitalization in the stock market.

Real estate enterprises are leading or second in issuing corporate bonds, the real estate sector accounts for 17.2% of the total capitalization in the stock market.

Insurance enterprises can be stock investors, real estate bond investors, can also be the parent company of banks, securities companies. This connection contributes to creating an effective channel for capital mobilization distribution, diversified financial-real estate ecosystem, creating opportunities for development but also increasing risks to the financial market, and real estate market.

The real estate market is considered to have many prospects, but also many challenges because of risks and uncertainties.Could you please tell me your opinion on this matter?

According to our records, there are 10 main risks and shortcomings in the market, which are: debt of corporate bonds due to be paid, of which about 35% belongs to real estate enterprises; the supply-demand relationship is still out of phase; the legal system regulating the real estate market is slow to be completed; policies on development and management of real estate are not appropriate; planning, real estate development according to planning, urban management is still limit ed; real estate finance is not really a regulatory tool, an effective medium-long-term capital channel; capacity, thinking and activities of participants in the real estate market are still inadequate; administrative procedures are still very complicated and expensive; other markets that support the real estate market have not developed synchronously; information, data and digital transformation systems have not yet been built and exploited.

Could you tell me more about the inadequacies related to finance and capital for the real estate market?

First of all, corporate bond debt is due to be paid, which is a risk in the short term as well as in the medium term. In 2022, according to Fiingroup's data, corporate bond debt due to be paid is VND123.4 trillion, VND232 trillion in 2023, and VND227.4 trillion in 2024, of which about 35% belongs to real estate enterprises.

If the corporate bond market freezes or shrinks for real estate enterprises, the risk of being "insolvent" is quite large and the risk of spreading to other sectors such as construction, securities, banking, and tourism is high. In addition, real estate finance, including tax tools, fees, capital sources, financial derivatives, is not really a regulatory tool, an effective medium-long-term capital channel.

With finance - real estate capital, there are currently four main problems. First, the real estate valuation stage lacks a market-based methodology and professional valuation organizations, which makes it difficult to apply the appropriate rates of deposit, margin, loan, tax collection.

Second, there is no tax collection for second real estate tax and more, or speculation tax, so it leads to both loss of budget revenue and failure to regulate the market, especially the supply-demand relationship and income distribution.

Third, real estate segments have not been classified to have appropriate tax and credit regulatory policies. Fourth, the tools and stages of capital mobilization are not diversified, still mainly focusing on bank credit and corporate bonds. Corporate bonds have only developed strongly in the last 3-4 years, but are slowing down.

For the healthy development of the real estate market, what solutions do you recommend, especially those related to capital for this market?

In my opinion, it is necessary to pay attention to minimizing corporate bond debt risks by creating suitable conditions for enterprises in general and real estate enterprises, in particular, to continue to issue bonds and fulfill debt repayment obligations; thereby minimizing the risk of a "domino" effect for investors and other related fields.

Strictly but wisely, artistically handle violations on the stock market and corporate bonds recently, to minimize negative impacts, ensure fairness and strengthen investor confidence.

At the same time, there are plans and solutions to solve and regulate the supply-demand relationship of real estate in the long-term.

Accordingly, urgently remove legal barriers (including legal for condotels, officetels, compensation) to clear a large number of backlog, unfinished, disputed projects.

Especially, it is necessary to synchronously and effectively develop real estate financial instruments, institutions and markets. Accordingly, promoting the formation of a number of new real estate financial institutions such as Real Estate Investment Trust (REIT), housing re-lending, re-mortgage agency (refer to Malaysian model), housing savings fund, social housing development fund, independent property valuation company (including real estate), the establishment of a center for information, data and forecast of the real estate market; interested in the development of capital markets (stock markets and corporate bonds) to create medium and long-term capital sources for the economy, infrastructure investment and real estate sector; allowing piloting a number of products, raising new capital through Fintech, crowdfunding, securitization of real estate projects).

Along with that, the classification of real estate segments is regulated to have appropriate credit, capital and financial policies. At the same time, soon study, have a suitable and feasible roadmap for the imposition of the real estate tax in order to combat speculation, distribute income; and promoting non-cash payments, this solution is also to increase the ability to prevent tax loss and reduce corruption.