More than 300,000 billion VND of real estate inventory: Which tycoon holds the most?

In a recent report, the Private Economic Development Research Board (Board IV) pointed out: although listed, Vietnamese enterprises are characterized by thin equity capital and operate mainly based on borrowed capital.

In which, real estate and construction are mentioned as the group with the biggest problem in cash flow, the number of days of inventory increased many times.

However, if viewed from an optimistic perspective, inventories will be an asset to secure the upcoming period when legal issues are resolved and market liquidity recovers, according to experts.

Real estate inventory increases

According to the reporter's statistics on the financial reports of the 10 enterprises with the highest inventories in the market at the end of September 2023, the total value was recorded at more than 301,600 billion VND, an increase of 5% over the same period.

The total value tends to increase, but the differentiation is quite clear among enterprises. Some enterprises recorded a "cooling down" in the inventory value item.

For example, No Va Real Estate Investment Group Corporation - Novaland (NVL), the inventory value at the end of the third quarter was more than 137,755 billion VND, an increase compared to the same period but has decreased by nearly 1,100 billion VND compared to the end of the previous quarter.

The largest portion of this "giant's" inventory is real estate under construction at VND126,976 billion, up 3% compared to the beginning of the year. This item mainly includes land use fees, design and construction consulting costs related to the project. Completed real estate for sale is VND10,669 billion, down 9%.

Vinhomes (VHM) is right behind with inventory value at the end of September 2023 of VND 55,168 billion, down more than 14% compared to the beginning of the year, equivalent to a decrease of nearly VND 9,300 billion.

On the contrary, the Industrial Development and Investment Corporation (BCM) recorded an increase of 6% in inventory, reaching VND22,165 billion. According to the explanation, inventory is mainly in the cost of production and unfinished business with VND19,826 billion.

Khang Dien Housing Investment and Trading Joint Stock Company (KDH) recorded inventory of VND17,152 billion by the end of September, an increase of 37% compared to the beginning of the year.

Some other businesses with inventories of over VND10,000 billion include Nam Long - NLG (VND16,800 billion, up 13%), Dat Xanh - DXG (VND14,788 billion, up 5%), Kinh Bac - KBC (VND12,257 billion, approximately at the beginning of the year), PDR (VND12,157 billion).

Meanwhile, Quoc Cuong Gia Lai - QCG is 7,100 billion VND, down nearly 2% and DIG recorded 6,276 billion VND, up 6%.

What does inventory reflect?

Mr. Truong Hien Phuong - Director of KIS Vietnam Securities - said that real estate inventory needs to be viewed in both positive and negative aspects.

On the positive side, according to Mr. Phuong, the increase in inventory may be due to businesses increasing the number of projects. In addition, for businesses with good cash flow, inventory is like "savings", a guaranteed asset.

However, the inventory at the end of September 2023 was higher than the same period last year, the expert noted, mainly due to legal difficulties, not many new projects, while old projects had poor liquidity and decreased demand.

"Unable to sell products, difficulty mobilizing bond capital, limited access to credit capital, and cash flow difficulties for some real estate businesses are very large," said Mr. Phuong.

According to the expert, the biggest solution now is to promote the settlement of inventory, resolve legal issues, and "untie" unfinished real estate projects.

In the third quarter 2023 report, the Ministry of Construction also pointed out that besides positive signals, many businesses continue to face challenges in transactions, land law, pressure to pay off maturing bonds...

Citing data reported by 52/63 localities, the Ministry of Construction said that real estate inventory in the third quarter of 2023 was about 16,940 units (including apartments, individual houses, and land).

Of which: 3,196 apartments; 6,554 individual houses; 7,190 land plots. It can be seen that the inventory ratio is mainly in the individual housing real estate segment and land plots of projects.

The resort real estate segment is not "better" as in July and August the number of newly opened resort real estate transactions was very limited.

Low demand and low deposits have made many investors more cautious in bringing products to the market, causing new supply to continuously decrease in 2023, according to the Ministry of Construction.