The bad debt in the real estate sector could be resolved if steps are taken to resume suspended projects, according to the HCM City Real Estate Association (Photo: batdongsan.com.vn) HCM City (VNA) - The bad debt inthe real estate sector could be resolved if steps are taken to resume suspendedprojects, according to the Ho Chi Minh City Real Estate Association (HoREA).
Around 500 real estate projects in HCM Cityhave been suspended for various reasons, including problems related to landclearance, land-use payments, and investors’ weak financial capacity.
The suspended projects have created a bigvolume of bad debt, severely burdening both property developers and banks aswell as the entire economy, the association has said.
The 90ha Phuoc Kien Project in Nha Be districtdeveloped by Quoc Cuong Gia Lai Company had been delayed for 10 years,according to a report from Thanh Nien (Young People) newspaper.
Eight percent of the total land for the projecthas not been cleared.
Nguyen Thi Nhu Nhu Loan, the company’schairwoman, told Thanh Nien newspaper that the suspended project had placed hercompany under pressure as it had invested 5 trillion VND (220 million USD).
The company has to pay more than 500million VND (22,000 USD) each day in bank interest.
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The situation has also affected thecompany’s partners, she said, adding that the company had decided to sell theproject to a new investor.
The 5 trillion VND Saigon One Town inDistrict 1, which has been delayed for six years, has been sold to anotherinvestor.
The Kenton project in Nha Be district hasresumed after several years of delay after its investor sought an additional 1trillion VND from banks.
Pham Cong Chanh, a real estate expert inHCM City, was quoted in Thanh Nien newspaper as saying that bad debt would behandled if 500 suspended projects resume.
Along with helping companies and banks, itwould create a diverse supply in the city’s property market, he said.
Chanh added that the authority should focuson projects with high liquidity that can be sold immediately. The others shouldbe divided in different groups with different solutions.
Other experts agree that one solution isnot needed for all projects.
Mortgaged projects that have land clearanceand building permit problems should be allowed to resume, while projects whichhave problems related to planning should be in one group, experts said.
Banks should also give more support todevelopers to solve the problems.
Le Hoang Chau, Chairman of HoREA, said thatit was important to reduce the number of suspended projects to handle bad debt.
A big cash flow would occur in the marketif these projects resumed and more real estate products were put on the market,he added.
He said that it was necessary to createmore advantageous conditions to encourage merger and acquisitions (M&A).
If M&A deals are implemented well, more cashwould flow to the market and there would no need for funds from the Statebudget.-VNA
VNA
