Bond issuance was expected to be an effective channel for property developers to raise capital. (Photo: kinhtedothi.vn) Hanoi (VNS/VNA) - Propertydevelopers are looking to other channels to raise capitals, such as bondissuance, as credit policies for property development are gradually beingtightened.
Hoang Cong Tuan, head of the MacroeconomicDepartment at MB Securities, said that property developers were still mainlyraising capital from banking loans and from customers, with payment followingconstruction progress.
However, bond issuance is proving an effectivechannel and is forecast to become a major tool for raising capital as creditpolicies for the property sector are gradually tightened, Tuan said.
According to Nguyen Thi Huong Giang from SaigonSecurities Inc, with the recovery of the real estate market during the pastthree years, many foreign investors were showing interest in investing inlisted or public property companies.
Giang said that foreign investors now tended toseek to buy stakes or convertible bonds of real estate companies as a channelfor investment.
Experts said that during the downturn of theproperty market in 2011-2013, bond issuance to raise capitals from investorswas difficult while direct investment was more effective.
However, bond issuance is more advantageous whenthe property market and the securities market are in recovery as they aretoday. Recently, several property developers geared up for bond issuance.
For example, Novaland raised 310 million USD throughissuing bonds to buy land and develop projects.
Sacomreal also planned to issue 73 million bondsto raise capitals for M&A deals.
According to Tuan, banks have been more cautiousabout providing loans for property development since 2017.
The central bank regulated that the ratio ofshort-term funds used for medium and long-term loans would be reduced from 50percent in 2017 to 45 percent in 2018 and 40 percent from 2019. The propertysector mainly needs medium and long-term loans.
The Government recently issued a resolutionrelated to its August meeting which required tight control of credits for theproperty sector.
Statistics of the central bank showed that loansfor the property sector increased by 2.19 percent in the first half of thisyear, much lower than the overall credit growth of 6.16 percent.
Outstanding loans in the real estate sectoraccounted for 7.5 percent of the economy’s total outstanding loans compared to15.8 percent in 2017 or 17.1 per cent in 2016.
According to Duong Thuy Dung from real estateservices firm CBRE Vietnam, the credit policies for the property sector weretightened gradually according to a long-term roadmap. Thus, firms could havetime to look for alternative sources of capital such as bond issuance,cooperation with foreign investors or finding partners for eachproject.-VNS/VNA
VNA
