The increase in new launches was a major factor in the 1H22 condo sales volume increases of 34% and 70% year over year in HCMC and Hanoi, respectively.

>> Wary of corporate bond maturity burden

Effort to improve cashflow  

According to CBRE, the increase in new launches was a major factor in the 1H22 condo sales volume increases of 34% and 70% year over year in HCMC and Hanoi, respectively.

Due to financing constraints, VNDirect observed a cooling in the prime unit prices in the premium and high-end segments. In keeping with VNDirect’ earlier prediction, real estate developers increased their contracted sales in 1H22, with VHM (234% yoy), NLG (87% yoy), and NVL (27% yoy).

Despite refinancing difficulties, Mr. Chu Duc Toan, senior analyst at VNDirect, thinks that the improvement in contracted sales and operating cash flow in 1H22 should support the debt maturity of listed property businesses in the following 12 months.

Stricter supervision for bonds

The total amount of corporate bonds issued for the first 6M22 decreased by 23.7% year over year to VND176,867bn. Due to increased risks of violations revealed in bond issuances and land use rights auctions, the government has recommended prudence on the corporate bond market, which has caused a decline in the value of new corporate bond issuances.

Property corporate bonds, which made up 24.0% of new issuance and witnessed a significant decline of 43.3% yoy in 1H22, according to market research conducted by VNDirect.

The Ministry of Finance has examined the regulatory framework with stronger criteria for issuers, notably in private placement, in order to mitigate any additional risks and improve market transparency. Credit institutions that invest in corporate bonds, provide underwriting securities, investment services, and distribution services for corporate bonds, particularly bonds of real estate enterprises, enterprises with high issuance volumes and interest rates, or enterprises with poor business results and no collateral, are subject to SBV's supervision and inspection.

>> Real estate loans shouldn't be entirely tightened

According to Mr. Chu Duc Toan, the issuing of corporate bonds in the coming quarters, particularly in the real estate sector, will be severely constrained.

Tightening bank loans

The State Bank of Vietnam (SBV) has mandated that banks closely monitor lending to the real estate industry and limit  credit to people who are hoarding, investing in, or using their money to buy, upscale, vacation, or resort properties. Additionally, the Circular 22/2019/TT-NHNN, which became effective in 2020, mandated that commercial banks lower the percentage of short-term funding utilized for medium- to long-term loans to 34% by October 2021 and 30% by October 2022.

The SBV is likely to raise credit quotas for some commercial banks from the end of 3Q22F. However, Mr. Chu Duc Toan believes credit capital flows should be prioritised for manufacturing and services, especially in priority businesses such as industry, export-import activity, agriculture, forestry, fishery sector. The SBV will carefully control credit flows into high-risk areas such as real estate, securities and BOT (Build-Operate-Transfer) projects.