NEWS
Investment fund predicts seven-year term to sell 70,000 apartments
03-10-2012
 Vietnam will need at least seven years to sell 70,000 apartments that lie empty if the country does not apply any stimulus measures. |
The comments come from Dragon Capital and were included in a report presented at the Autumn Economic Forum recently hosted by the National Assembly's Economic Committee.
Statistics revealed that at present the apartments in Hanoi and HCM City have not yet been sold, however, the research group said the real figure was likely to be much higher.
According to the report, by the fourth quarter of 2011, 69 listed real estate companies owed debts of VND67 trillion (USD3.19 billion) and were having to spend VND13.4 trillion (USD638 million) in interest annually.
Short-term loans in the fourth quarter of 2011 increased to VND26.4 trillion (USD1.25 billion) adding increased bite to the debt schedules. This leaves real estate developers having to source VND39.8 trillion (USD1.8 billion) to pay off their debts in 2012.
Meanwhile, the report showed that 69 companies only had enough funds to pay a quarter of the debt, while their profits were capable of only covering a third of the annual interest.
If the apartments were sold at an average price of VND1 billion (USD47,600), much lower than the prices two to three years ago, the total value of the apartments would reach VND700 trillion, said Head of the Vietnam Economics Institute Tran Dinh Thien, adding that this was a worrying figure which could threaten the Vietnamese banking sector. This would continue to add pressure to local government to deal with the real estate sectors bad debts.
