A view of Novaland's The Sun Avenue project(Source: ndh.vn)
Hanoi (VNA) - The HCM City Real Estate Association (HoREA) hasrecommended real estate companies transform themselves into publicly listedjoint-stock businesses so they are able to seek greater funding to improvebusiness performances in 2018.
The message was delivered in a recent document the association submitted to thecity People’s Committee to address business policies for domestic propertydevelopers in 2018.
The association asked property developers to increase their equity to improvetheir internal strengths and study possible solutions to propose that theGovernment approve real estate projects as tradable assets, such as securities.
In the document, it also suggested property developers should issue corporatebonds, project bonds, shares and consider listing on foreign stock exchanges toraise capital funding.
“Property firms should merge and associate with each other to create jointventures and large-cap firms that are strong enough to compete with foreigncompanies,” HoREA said in its statement.
“They should establish partnerships with foreign invested enterprises andinvestment funds, which have strong financial capacities, to cooperate, lookfor new project investments, draw more technical and financial support,exchange experience and improve the quality of their corporate governance.”
Such recommendations aim at helping local real estate firms cope with recentregulations to tighten lending policies and control non-performing loans amongforeign-invested banks and credit institutions, which would make it harder forproperty firms to have access to capital funding, according to HoREA.
Those are also solutions to help the firms improve corporate governance,business efficiency and quality of products and services, it said.
The State Bank of Vietnam, on December 28, 2017, issued Circular19/2017/TT-NHNN to reduce the ratio of short-term capital used for fundingmiddle- and long-term projects from 50 percent in 2017 to 45 percent in 2018,and 40 percent beginning January 1, 2019.
On January 23, 2018, the central bank issued Document 563/NHNN-TTGSNH thatrequired foreign-invested financial institutions to restrain their investmentsin the real estate sector and direct capital funding to other sectors.
To improve business performances, HoREA recommends businesses assure thatearning targets are reachable and project developments are completed, so thatthey are qualified to receive loans from financial institutions.
In addition, real estate businesses must give first priority to the interestsof customers, guarantee the quality and schedule of project construction, anddevelop green, environmentally friendly living conditions for customers, HoREAsaid.
Other issues that real estate companies should pay attention to includeafter-sales and customer care services, so that real estate firms can receiveadvance payment from customers, in accordance with regulations on trading ofreal estate projects.
According to existing regulations, real estate firms are able to raise 70percent of the contract value via advance payment from customers if the outputsare not yet transferred, and 95 percent if the outputs are handed over. VNA
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