Businesses give real estate loans cold shoulder

According to the State Bank of Vietnam, outstanding real estate loans of commercial banks now account for only 9% of total outstanding loans of the whole banking system. The Bank for Investment and Development of Vietnam (BIDV) has outstanding real estate loans of 5.87% of its total outstanding loans, while Sacombank 3%.

However, some banks have announced they have resumed real estate credit as capital has become more profuse. VP Bank, for example, has announced VND2tril capital has been set aside for funding real estate projects, while Military Bank said that the bank’s management board has approved a plan to provide real estate credit at up to 10% of its total credit limit. Prior to that, Sacombank and some other banks launched products on funding house purchase plans with payment by installments.

Foreign real estate brokers practise in VN

Ha Noi — Foreign real estate brokers with valid licences granted by foreign agencies will be permitted to practise in Viet Nam, the Construction Ministry has said.

These licences must be translated into Vietnamese, notarised or certified in accordance with Vietnamese laws, and sent to local agencies in charge of managing real estate business activities, the ministry added.

The Ministry of Construction will issue specific regulations on granting real estate brokerage and appraisal certificates to foreign individuals in the near future.

The present Law on Real Estate Business does not require educational and professional qualifications from individuals applying for real estate brokerage certificates. — VNS

Domestic real estate developers have land but no money

Truong Thai Son, Deputy General Director of Hoang Quan Real Estate Corporation, pointed out the three biggest problems of the real estate market.

First, the market is still a fledgling market with insufficient components and few transactions. Moreover, a lot of ‘real estate products’ are still not considered commodities.

Second, there exists a big gap between supply and demand. The national market economy is now developing strongly, and the demand for real estate is increasing, but supply is becoming scarcer.

Some people mistakenly think that the real estate market is now freezing because of oversupply and low purchasing power. In fact, demand still far exceeds supply. The market is now lackluster because of the overly high prices of land and apartments, which prove to be unaffordable for the majority of Vietnamese people.

Engel moves into Vietnam

Real estate developer Yaakov Engel is expanding his business ventures in the Far East with the entry to Vietnam. Engel's privately-held real estate company EngelInvest Group, of which Engel holds 72%, and which is managed by Alon Avdani, will invest in three projects with a total of 9,000 high-end apartments in Ho Chi Minh City (Saigon), the largest city in Vietnam. The projects, which will consist of 960,000 square meters of built-up space, will be completed in several stages at a total cost of $1.1 billion. The company expects $1.6 billion in proceeds from the projects.

In the first stage, $450 million will invested in building 400,000 square meters of residential properties, with proceeds estimated at $650 million. Engel told "Globes" today that the projects required shareholder equity of around 30%, so EngelInvest and its partners are providing $135 million in equity for the projects, of which EngelInvest itself is providing 80%, or over $100 million. All three projects are being built on land approved for building and work on them is expected to commence simultaneously in early 2009. Two of the projects are being built in partnership with subsidiaries of local banks, and the third with a local developer.

Vietnam’s short-term economic issues are nothing but a blip in the long-term path to prosperity

Since Vietnam joined the World Trade Organization at the end of 2006, investment into the country has accelerated, and the longer term picture still remains excellent. Much of the import growth is for capital goods which will boost productive capacity and infrastructure which augers well for long term economic prosperity. However, the speed of development and investment has left the economy reeling. An uncontrolled surge in money supply in 2008, together with spectacular growth in imports is leading to short term instability in the economy. At the time of writing, it is possible that the current high inflation rate of plus 20 percent will require severe action by the government if a wider economic crisis is to be avoided.

Far from running for the exit at the first sign of trouble, foreign investors are still falling over themselves to pour money into the country in the firm belief that the short-term economic issues are nothing but a blip in the long-term path to prosperity. Vietnam’s future remains bright with the majority of citizens still believing they are in the midst of an economic boom. GDP growth forecasts for the year have been reigned in to 7.5 percent, with the consensus view of about 7.6 percent for 2009.