The view of the Grand Manhattan project developed by Novaland JSC in HCM City, one of the leading companies in the real estate sector. (Photo novalandvietnam.vn) Hanoi (VNS/VNA) -Although there are some listed property developers worth investing in,challengers are still aplenty, especially as earning don’t normally surge untilthe final quarter of the year.
According to KIS VietnamSecurities JSC (KIS), the earnings of the real estate sector in the first halfof the year were dull as the market was hit hard by external factors.
Listed real estate companiesposted a 21.7 percent annual drop in revenue in the first six months andpost-tax profits of parent companies’ shareholders fell 12.7 percentyear-on-year.
All listed property developershave fulfilled 27.5 percent and 27.7 percent of their revenue and post-taxprofit plans.
The companies also reportedtotal net-debt on June 30 surged 50 percent year-on-year. The listed firms withthe highest amount of net debt were Vinhomes JSC, Novaland and Dat Xanh Group,whose net debts gained 153 percent, 57.9 percent and 107 percent, respectively,compared to the first half of 2019.
KIS analysts said thedifficulties for the real estate sector will not fade soon.
In the third quarter, theproperty market will stay dreary as social-distancing measures to fight theCOVID-19 pandemic will make sellers stall sale events, they said.
In addition, buyers will behesitant because they are still worrying about the future, they added.
Specialists at AgribankSecurities JSC (Agriseco) said the property industry is among the worst-hitsectors during the pandemic as social distancing measures have disrupted saleactivities and postponed construction.
Meanwhile, buyers are notrushing to purchase real estate products because the economic outlook is stillquite gloomy, they said, adding resort, leasing and retail sections are thehardest hit and will take time to recover.
In addition, buyers are stilltied-up by a number of legal bottlenecks that have remained unsolved since2018, which will keep the number of ready-for-sale projects very low.
According to CBRE, the totalsupply of property outputs in the Hanoi market in the second quarter dropped 39percent year-on-year to nearly 5,570 items and the quantity of sold items inthe second quarter fell 27 percent on-year to 5,100. Meanwhile, in HCM City,the total supply reached a five-year low of 1,644 items.
SSI Securities Corporation(SSI) reported that in the first six months of 2020, the trading volume ofhigh-class apartments with the selling price of average 60 million VND (2,590USD) per square metre dipped nearly one-third from the previous year.
Apartments with leasing priceof more than 1,000 USD per month were also empty because of the COVID-19pandemic. The average leasing price offered on the market was slashed by 20-25 percentdue to lower demand and spending on house leasing was also curbed.
Middle-class apartment leasinginterest rates have dropped by 30-50 basis points since the outbreak began. Therates in HCM City range from 4.5 percent to 6.2 percent per year and from 4 percentto 5.4 percent per year in Hanoi.
Agriseco also noted that thefinancial condition of real estate firms has worsened, therefore, companieshave had to borrow more to maintain their operations.
On June 30, the totaloutstanding debt of the real estate sector increased by 16 percent in sixmonths to 161 trillion VND (6.95 billion USD). The ratio of total outstandingdebt to total revenue also hiked to 0.87 by the end of the second quarter from0.67 compared to 2019. Moreover, the ratio of borrowings to equity capitaljumped 54 percent in the second quarter – the highest quarterly gain since thebeginning of 2019.
Second-half expectations
According to KIS analysts,increased discounts and gifts, and due date extensions will be key to boostlocal market demand, while top-leading companies such as Vinhomes and Khang DienHouse Trading and Investment JSC will record earnings surge in the last monthsof the year as they are about to complete selling thousands of apartments
KIS also expected lending ratesprovided by commercial banks will remain low until the end of the year. Theaverage lending rate for house buying was 11.4 percent in the last quarter –unchanged from the previous one. The rate fell 20-40 basis points for one-yearloans in July and early August because banks wanted to boost house-purchasingpower while borrowing demand in other sectors was weak.
According to SSI Securities,domestic market studies have shown 38-40 percent of the population considerreal estate products a safe investee.
The growth of the marketdepends on the infrastructure development and interest rates, the company said,adding low-storey buildings are more attractive to buyers because they caneasily obtain the land use right certificate when purchasing.
Agriseco specialists saidlisted companies perform better than the market average and their stocks aregood investees as their projects are often licensed, debt-to-equity ratios arelow and sale volumes are often optimistic./.
VNA
