.jpg "Real estate market in the south of Hai Duong city is bustling")
.jpg "Hai Duong issues economic and technical norms to prepare land valuation estimates")
.jpg "Extremely dangerous forest fire risk in Kinh Mon, Chi Linh")
-ac017d3d3ce25d3405471795d6bb26f0.jpg "Gia Loc needs over 10 billion VND to invest in renovating and expanding landfills.")
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Like a "blood clot", unfinished real estate inventory due to prolonged legal problems and difficult access to capital not only exhausts businesses but also narrows supply and pushes up selling prices.
According to the reporter's statistics from the financial statements (audited and unaudited updated to March 11) of about 60 listed real estate enterprises, the amount of inventory by the end of 2023 was nearly 348,000 billion VND (about 14 billion USD converted at the current exchange rate), an increase of approximately 3% compared to the end of 2022 and an increase of 30% compared to 2021.
The amount of inventory recorded on the financial statements of enterprises includes real estate for sale, unfinished and completed construction...
The majority of the $14 billion in inventory is unfinished real estate. With the characteristics of real estate businesses, inventory partly represents the potential for project development and future revenue, so it is considered a "reserve".
| Inventory value of about 60 listed real estate enterprises (billion VND) | |
|---|---|
| Quarter 4/2021 | 268,408 |
| Quarter 4/2022 | 336,461 |
| Q4/2023 | 348,000 |
Statistics are based on data from businesses with large inventory ratios on the floor (excluding industrial real estate businesses), the actual value will be larger when adding OTC businesses (unlisted)
But in the case of inventory from unfinished projects that last for a long time due to legal problems and difficulty accessing capital, it is no different from a "blood clot", wearing down the business's strength.
Holding onto projects for too long is an important reason for pushing up capital costs and selling prices. The scarcity of resources is also the main factor causing apartment prices to continuously reach new levels.
Looking at the data over a long period, 2023 inventories are at their "peak" level, even during the previous COVID-19 outbreak, which was not as large as last year.
At a meeting chaired by Deputy Prime Minister Tran Hong Ha on March 11, leaders of the Ministry of Construction said that there are still hundreds of real estate projects waiting for the working group and localities to remove obstacles.
Of which, Hanoi is at the top with 246 projects, followed by Ho Chi Minh City with 143. Not to mention many other localities.
With legal difficulties, in addition to businesses' efforts to save themselves, experts say there needs to be real involvement from relevant agencies and local authorities in clearing procedures, removing bottlenecks, and "untying" unfinished projects.
The combination of weak liquidity, project licensing, legal problems, credit tightening... makes project implementation and sales slow. This makes the average number of inventory days of listed real estate businesses increase to a very high, alarming level.
If in 2018, the average inventory turnover of real estate businesses was only 659 days, in 2022 it peaked at 1,562 days, and in 2023 it was 1,283 days.
A report published last year by Board IV also said that one real estate company took 149 years to sell out its inventory.
| Average inventory days of listed real estate companies | |
|---|---|
| 2018 | 659 |
| 2019 | 942 |
| 2020 | 931 |
| 2021 | 1,099 |
| 2022 | 1,562 |
| 2023 | 1,283 |
Mr. Duong Duc Hieu, Director - Senior Analyst at Visrating, pointed out that determining land prices to calculate land use fees is one of the major obstacles causing delays in legal approval of real estate projects in the past 5 years. This factor also accounts for more than 50% of legal delays in real estate projects.
"The project's legal delays have reduced long-term bank lending for some listed real estate companies," according to Visrating experts.
On the positive side, compared to the 2013 Land Law, the 2024 Land Law provides more detailed and market-oriented guidance on land valuation. This will help authorities determine appropriate land prices.
This will speed up the project legal approval process and allow qualified real estate projects to access capital, especially from banks, which have been negatively affected by legal delays over the past five years.
According to the Vietnam Association of Realtors (VARS), apartment prices in Hanoi have been continuously increasing in both the primary and secondary markets. Apartment prices in Ho Chi Minh City have also begun to enter a cycle of price increases again.
Despite the strong increase in demand for housing, the supply of apartments is still not growing proportionally. The supply of apartments in 2023 recorded a decrease in the two markets of Hanoi and Ho Chi Minh City.
The number of newly approved real estate projects is increasingly scarce, while ongoing projects are "struggling" due to legal and capital problems, according to VARS.
According to the reporter's records, Hanoi apartment prices are being pushed up abnormally high, some suburban areas are in a state of "crazy prices", with selling prices of 60 - 70 million VND/m2, equal to land prices.
