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| Mr Nguyen Anh Que |
Up to this point, the real estate market still faces many difficulties. In your opinion, what are the major difficulties that the market is facing?
The real estate market is facing several difficult groups. The first is investment procedures, slow project implementation, and difficulty in land clearance. This is because the laws are overlapping, the law has no specific guidelines, and the understanding and implementation of the law seem to vary between individuals and agencies. Therefore, the Law on Land, Law on Real Estate Business, Law on Investment and other laws related to real estate are also being revised to remove difficulties for businesses. The second is the difficulty in market liquidity, low supply and high demand because projects have been stuck for a long time, so they have not been able to deploy and release products. Difficulties are also due to high deposit rates; real estate lending is also higher than other industries, so real estate transactions from April 2022 to now have been quite quiet. The third is the story of the trust of businesses and investors fluctuating.
In your opinion, what are the main causes of these difficulties?
I think the cause lies in macro policy and the internal market. Undeniably, the bottlenecks in credit room, legal procedures, inflation, interest rates, exchange rates… and the global economy’s instability have greatly impacted real estate. But we should also look directly at the fact that even within the real estate market, there are many problems, such as speculation, price fever, supply-demand mismatch, and imbalance in the product structure.
In 2022, the world faced inflation, the Fed raised interest rates to curb inflation. Central banks in other countries, including the State Bank of Vietnam, increase interest rates and limit lending. This has led to real estate being limited in credit, facing high-interest rates if they want to access credit. Domestically, from 2020 to 2022, real estate growth is hot, prices are pushed up, and the risk of bubbles occurs. Therefore, the State must have policy solutions and measures to “deflate” the market. The second reason is due to internal problems. Some real estate enterprises have made mistakes and been handled by the authorities; this has partly worried investors, creating bad psychology for businesses. The third reason is that besides interest rates, the bond channel is also limited and, at the moment, is almost inaccessible. There is one last source of capital that real estate businesses can access, which is money from the people. However, the move to push deposit interest rates up very high from the State Bank made people’s idle money flow into banks instead of for investment, production, and business. Therefore, the cash flow is not circulating.
So in your opinion, is there a need to rescue the real estate market?
We must be aware that rescuing the real estate market at this time will be something, not rescue anything; then we can conclude whether to rescue or not. If not rescued, real estate prices will fall. On the positive side, it will be beneficial if you approach it from the perspective of homebuyers looking to buy and live. Approaching from the perspective of enterprises renting or clearing land will see lower costs and production costs.
On the negative side, the market will continue to fall into a deadlock due to the liquidity of capital flows. Other industries related to the real estate sector will also be affected. In addition, in terms of contributions to the state budget, revenue from real estate is greatly contributing to both the central and local budgets. Therefore, a market slump will lead to an impact on the state budget. At the same time, when real estate and construction are restricted, the contribution to GDP decreases, and the economic growth rate slows down. Therefore, it is necessary to have a solution for real estate to develop stably and sustainably. We need to curb real estate prices and at the same time, try to push the income level of workers higher. Then, people’s ability to access housing will be better. Besides, we also need effective policies to develop housing for low-income people and workers that will gradually solve housing problems. In addition, we need to have preferential policies for constructing industrial parks. Thus, I believe the real estate market should be rescued, but a solution must be found for the real estate market to develop stably and healthy again.
As for real estate businesses, I think that businesses also need to restructure to overcome difficulties. The restructuring of enterprises depends on many factors, including the current business situation, financial capacity, number of employees, the size of the current office and the direction of plans as well as the economic – politics situation and the operating direction of the Government.
Currently, is capital source the biggest difficulty of real estate enterprises? What is the solution to this story?
The difficulty of all real estate enterprises at present is capital. The urgent thing that needs to be solved immediately and always is how real estate businesses can access capital at a reasonable interest rate. With how the economy has been run in the past two years, very few businesses have a lot of cash, and most have a lot of assets. When the capital market closes, it is difficult for businesses to switch to another industry because there is no capital. Selling projects to other real estate companies will also face difficulties because other businesses are also short of capital. Therefore, it is still necessary to solve the capital problem for enterprises. To ensure the safety of the credit system, it is necessary to reduce the deposit interest rate and gradually reduce the lending interest rates so that by the fourth quarter of 2023, the deposit and lending rates will return to the same level as before. 2021. If interest rates are not reduced in a planned way, commercial banks will be at risk because they have long mobilized with high-interest rates. The financial system will also face risks if commercial banks are at risk.
In my opinion, reducing deposit interest rates is more important than reducing lending rates because people will automatically withdraw money from the bank to invest in production and business activities. Even if banks do not give loans, real estate businesses can still rescue themselves. Unlike today, businesses are being covered at both ends. The source of money in the people is “blocked” by high deposit rates, money from banks has high lending rates, and limiting credit room makes businesses unable to do anything.