Construction of an apartment complex in District 1 in HCM City stopped at the end of last year (Photo: VNA)Many of them have already announced plans to sell properties aspart of their debt restructuring strategies.
The trend has been on the rise so far this year, with many realestate firms looking to repay their debts during their annual general meetings.
LDG Investment (LDG) has announced plans to sell two projects: BaiBut - Son Tra beach resort in Da Nang city and an apartment complex in Binh Duongprovince’s Di An city.
The Bai But - Son Tra beach resort, which covers an area of 29hectares with a total investment of over 4.6 trillion VND, is one of LDG’s keystrategic projects.
The company had explored the possibility of finding partners toinvest with a 50-70% stake. However, LDG’s leaders said that this was unlikelyin the current real estate market.
Similarly, Hai Phat Investment Corporation recently announced thesuccessful sale of its capital contribution in commercial land use rights at acommercial project in Nha Trang city.
The development adjacent to Tran Phu bridge and the mouth of Cai riverwhere it flows into the sea consists of three 40-storey towers with threecommercial floors, 10 hotel floors, and 27 apartment floors.
It also plans to sell other real estate projects in the northernprovinces of Lao Cai, Bac Giang, and Quang Ninh.
Hoang Anh Gia Lai group recently announced its plan to sell one ofits last prime assets. A hotel in Pleiku city in the Central Highlands provinceof Gia Lai province will be sold in order to settle its bond debt.
Pham Duc Toan, a seasoned professional in brokerage and realestate development, said the main driver behind the trend is the lack ofrevenue for many businesses since the beginning of the year. To stay afloat,they are resorting to selling assets and projects.
However, liquidity remains a significant challenge, as potentialinvestors are wary of investing due to financial uncertainties, he added.
In addition, the prices of most real estate projects remain toohigh, and many of them encounter legal obstacles related to land use rights andother legal matters.
A director of a Hanoi-based real estate company, who wanted toremain unidentified, said it typically takes six month to a year to finalisethe sale of projects.
According to the director, while companies still have assets andprojects to offer for sale, many smaller real estate firms have already closeddue to financial constraints.
Bond repayment crisis
According to a report by VNDirect, corporate bonds worth nearly 273trillion VND will mature this year, mostly in the last two quarters.
The report also stated the amount of maturing bonds from realestate developers will be 65.9 trillion VND in the second half of this year andover 124 trillion VND in 2024.
To address the issue, the government in March issued a regulationallowing companies to use other assets to make bond payments if approved bydebtholders.
The regulation, along with the extension of debt maturities, hasprovided much-needed breathing space for issuers.
As a result, more than 42 trillion VND (1.77 billion USD) worth ofcorporate bonds were rolled over in the second quarter.
The market experienced a surge in 2020 and 2021, with issuancesrising to 462 trillion VND and 658 trillion VND, respectively, according todata from the Vietnam Bond Market Association.
The boom was largely driven by increased capital demand fromproperty developers and banks, but the property market collapsed and manyissuers faced trouble following investigations into bond issuance and impropercapital use by several large firms and related arrests in the middle of last year.
As of the end of August, the number of dissolved real estate firmshad increased by over 30% year-on-year, according to a report by the Ministryof Construction./.
VNA
