Real estate firms look to government for support
21-NOV-2008 Intellasia | Thanhniennews
Nov 21, 2008 - 7:00:00 AM
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The government should take action to boost the property market which remains in a slump since the early part of this year, analysts, speaking at a meeting in HCM City, said.
Dinh The Hien, an Eximbank board member, said property is the most common collateral for bank loans, adding it accounts for 80% of outstanding loans.
"Without the government's assistance to boost the market, banks will have to sell off or occupy properties of borrowers who fail to repay debts.
"[This] will send supply surging, depressing property prices further."
But Kien Long Bank's deputy general director Pham Khac Khoan said it takes banks three-years to complete the procedures required to dispose of a property.
"Properties that are in demand should be sold first," he said, to prevent prices from plunging.
Many delegates at the meeting agreed with a recommendation to set up a fund of 50-100 trillion dong (US$2.9-5.8 billion) to help banks deal with bad debts that involve property as collateral.
The money can be mobilised from the reserve commercial banks hold with the central bank, the central bank's monetary stabilisation fund, the government's price stabilisation fund, or the money raised from divesting the government's stakes in state-owned companies.
Hien said property firms are now struggling to find buyers. "Therefore banks and state-owned property firms should draw up incentives to encourage people to buy houses," he said.
Nguyen Huy Cuong, director of Sacombank Securities' market research department, said, "Property firms should focus on selling houses worth 500 million dong (US$29,500) to 1 billion dong, which have a huge demand."
At another meeting held by investment fund VinaCapital last week, real estate consultant Savills' CEO Brett Ashton said the housing market is bottoming out but was not sure when it would bounce back.
Phu My Hung Corp.'s marketing director Alpha Chen expected the market to take at least three-years to rally.
Bonds, compulsory treasury bills safer
The HCM City Economics University's vice principal, Tran Hoang Ngan, said only a few banks have sold the compulsory treasury bills they had bought in March as many found the 13% coupon rate on them more attractive and safer than loans against property.
The State Bank of Vietnam, the central bank, ordered banks to buy 20.3 trillion dong (US$1.27 billion) worth treasury bills as part of efforts to contain accelerating inflation.
Investment fund Dragon Capital's professional director Le Anh Tuan shocked other attendants at the meeting by disclosing that state-run shipbuilding firm Vinashin's bonds carried coupon rates of 22-24%. Bank lending rates, meanwhile, have edged down to a maximum of 18% now and are expected to fall further.
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