Many real estate businesses still have difficulty accessing bank capital.

Difficulty accessing credit capital due to many risks

In recent times, the market has recorded many positive signs of transactions reappearing. Some financially strong real estate businesses, able to endure the recent freezing period, have also begun to complete projects to bring products to the market.

However, the recovery is not really strong because there are still many other businesses that are gradually "sinking" when they have to hold on to projects without being able to find capital to continue implementing them to clear the cash flow. These are businesses that are entangled in legal issues, have difficulty meeting the conditions of the bank or cannot continue to borrow capital because the interest rate is not really attractive, while still being burdened with the interest from the previous loan.

There are even businesses that are not qualified to pass the application review round. Because the health of these businesses is in the danger zone, there is a high risk when lending.

Many real estate businesses still have difficulty accessing bank capital. Image 1 — Many businesses have difficulty accessing loans due to the many risks involved.

Meanwhile, other capital flows that are often used by real estate businesses, such as customer mobilization and bonds, are also facing many problems. With investor confidence having dropped sharply in recent times, future housing projects seem to have little attraction for buyers. Many people even try to wait to buy houses with certificates, even though they have to pay more but they reduce some of the risks they will encounter.

As for the corporate bond market, confidence in this market is also not much after the recent difficult period of the market. The value of individual bond issuance has continuously decreased since June 2022 and only recorded improvement since March this year thanks to Decree No. 08/ND-CP and some moves from the State Bank.

Of which, the real estate industry ranked second in the total value of corporate bond issuance recorded in the first 7 months of 2023 with VND 26,055 billion (accounting for 33%). Many businesses have successfully negotiated with bondholders to extend the debt repayment period.

However, despite signs of recovery, the pressure of maturity is still weighing heavily on many real estate businesses. Extending the debt repayment period is only a temporary measure, helping businesses have a "breathing time" to stabilize their business operations, in order to restructure their debt to gradually recover.

According to the Hanoi Stock Exchange, next September is also an important time for bond maturity in 2023, when about 41,000 billion VND of bonds are due - according to HNX. The list of businesses that are late in paying is still growing day by day. As of August 24, there are about 67 businesses on the list of late payment obligations for interest or principal of corporate bonds.

Many businesses face the risk of dissolution.

According to a recent survey by the Vietnam Association of Real Estate Brokers (VARS), if the market situation continues to be as difficult as it is now, only 25% of businesses can survive until the end of the third quarter of 2023. If the difficulties last until the end of 2023, the number of real estate businesses facing bankruptcy will increase.

In addition, up to 20% of real estate trading floors are facing the risk of dissolution and bankruptcy, 40% of floors are struggling to survive, only operating with a few core staff. The rest are able to survive, but their resilience is not high.

Many real estate businesses still have difficulty accessing bank capital, picture 2 — Many real estate trading floors are still in the "dying" stage.

This survey also shows that up to 43% of surveyed businesses said that new mechanisms and policies issued since the beginning of 2023 have had a positive, very positive impact on real estate supply. Meanwhile, up to 57% of businesses assessed that these mechanisms and policies have only recorded a normal impact.

Regarding investor psychology, survey data shows that only 21% of surveyed businesses assessed that the new mechanisms and policies issued from the beginning of 2023 to now have had a positive, very positive impact on investor psychology. The remaining businesses all said that after a period of observation and monitoring, they did not see a real and clear change in the market, so after stabilizing their psychology, investors were still extremely cautious before making a decision.

Regarding access to capital, more than 70% of businesses said that the mechanisms and policies to solve difficulties in capital sources have not really had an impact on businesses. Meanwhile, the remaining 30% recorded the positive impact of these policies in the group that needs to solve problems related to bond issuance activities.

These figures show that, although in the past there have been many mechanisms and policies to remove difficulties for the market and real estate businesses, due to objective and subjective difficulties related to capital sources, financial leverage, and market factors, many businesses have fallen into a "dying" situation.

Many opinions say that, in order for real estate businesses to be able to absorb capital easily, market problems must be thoroughly resolved. In addition, capital attraction also needs to be exploited in many different channels, instead of focusing on traditional channels such as bonds, credit and mobilization from customers.

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