The real estate market is vibrant after the pandemic but it is also facing many difficulties and challenges.

Surrounded by many difficulties

According to the report of the Ministry of Construction on difficulties and obstacles of the real estate market, the activities of enterprises in the real estate sector have gradually recovered compared to 2021.

However, in 9 months in 2022, the operation of real estate enterprises still faced many obstacles such as difficulties in accessing capital for project implementation; loan interest rates, foreign exchange rates, gasoline prices, and construction material prices increased, leading to high costs, affecting their production and business activities.

Most ominously, many enterprises have difficulty in implementing the project due to problems in the investment and legal procedures of the project, especially the approval of investment policy and procedures for land allocation, and calculation on land use fees.

Mr. Vo Hong Thang, Deputy Director of Research and Development - DKRA Real Estate Services Group (DKRA Group), said that the real estate market was falling into a state of "freezing" of liquidity, decelerating from April 2022 and getting more and more gloomy.

Data from DKRA Vietnam showed that currently, the market's liquidity was at an extremely low level, only 10-20% compared to April 2022. Particularly in Ho Chi Minh City with the segments of villas, townhouses, land plots, both supply and consumption were only 9 - 30% compared to the previous period.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that enterprises were facing double difficulties that need to be removed in terms of legal issues and capital. With the current difficult context, Mr. Khuong warned that many real estate enterprises were at risk when many project developers faced legal difficulties of regulation and capital, so they could not deploy projects or it was also difficult for investors to borrow capital and invest in products according to the schedule.

Accordingly, the State Bank needs to soon support enterprises with implemented projects that need to continue disbursing when the bank had appraised the documents. For projects that have completed legal procedures and need capital for development, they also need to provide capital for enterprises to implement.

Sharing the same view, Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Investment Joint Stock Company, said that scarce cash flow was causing real estate transactions in the market to decrease by 90%. Because the deposit interest rate was too high, the money had been sucked into the bank, while the credit room was no longer available, so homebuyers had to buy in cash, which also made the market difficult.

On the other hand, the psychology of the market and buyers were afraid that banks would continue not to lend, the credit room would not be released, and the savings interest rate would continue to increase. While the interest rates of banks were very high, and there were banks with interest rates up to 16%, this stopped everything, especially at the end of the year.

Finding support from FDI capital

From the perspective of foreign experts, Mr. Neil MacGregor, CEO of Savills Vietnam, said that the real estate market had faced legal difficulties for many years, and financial issues were only one factor that made this situation more difficult.

In order for the market to recover, it is necessary to have legal support in project development for enterprises. As for financial matters, while capital mobilization channels are not feasible, enterprises should look to foreign direct investment (FDI) channels as a suitable solution. The search for FDI capital is one of the particularly important resources in promoting economic growth, especially in the current context.

According to Mr. Neil MacGregor, finding capital for the real estate industry from FDI inflows was completely feasible for enterprises because of the great interest of investors in the Vietnamese market. Currently, real estate was the second sector in the list of attracting FDI capital as of September 20, 2022 with more than US$3.5 billion, accounting for nearly 19% of total registered investment capital, nearly double compared with the same period last year.

However, to take advantage of this capital, enterprises should be flexible and proactive in finding alternative sources of capital. With clean land funds, transparent working methods and the available capacity of investors, it was not difficult for enterprises to find suitable investors.

Moreover, with the advantages of understanding the market and administrative procedures of domestic enterprises, combined with the experience and financial capacity of foreign investors, many real estate projects with large-scale models and good quality had been supplied to the market in all segments, emphasized Mr. Neil MacGregor.

In addition, according to Dr. Can Van Luc, Chief Economist of BIDV, in order to overcome difficulties and develop, real estate enterprises should restructure and control risks of cash flow, interest rate and exchange rate; actively learn and approach the recovery program.

Green recovery, green growth to green real estate was the trend. In particular, digital transformation was an inevitable trend, the application of technology to all activities of enterprises comprehensively changed the way of operations, increasing productivity, quality, and efficiency and bringing more value for customers, including real estate enterprises. Buyers could use websites and apps to look up information about real estate; agents and investors could promote online and arrange meetings.

In fact, real estate enterprises should pay attention to digital transformation, catch up with new trends and adapt, manage change, and manage risks. According to experts, during the 4th Industrial Revolution with the development and strong support of new technologies, digital transformation has become an inevitable trend and comprehensively changes all fields of business, not excluding real estate.