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Sourcing capital for the real estate market
06/08/2010 - 237 Lượt xem
According to the Land Administration Agency, commercial banks invest around 18 percent of their debts in real estate.
Prior to the cooling of the real estate market in 2003, loans for real estate projects accounted for as much as 25 percent of total debts.
In Ho Chi Minh City, approximately VND50,000 billion and nearly VND25,000 billion from debts were poured into real estate. In Hanoi, debts from real estate loans reached around VND9,000 billion, representing 10 percent of debts.
When the real estate market fell on hard times, some projects reached deadlines to pay their debts and companies failed to pay. Commercial banks, therefore, limited and even stopped their investment in real estate.
Dr Nguyen Thi Mui from the Institute of Science and Finance said while the Vietnamese security market has not yet developed, credit loans from commercial banks remain a major capital supply channel for real estate companies.
Ms Mui said it is necessary to mobilise more mid-term and long-term capital from commercial banks, establish and enhance the quality of real estate information channels and amend and supplement some regulations in the legal system on real estate.
However, market experts said that by depending on credit loans from commercial banks, the real estate market may be shooting itself in the foot. Meanwhile, there is a huge amount of idle capital from people, which businesses should explore while waiting for credits loans from commercial banks.
Issuing real estate certificates will help open a channel to make use of citizens’ capital, showing the close connection between securities market and real estate market. The method is aimed at professional customers such as banks, insurance and securities companies, and then expands to customers with serious needs for housing. Therefore, land clearance will be implemented quicker and the lives of resettlement people will be stable sooner. Disputes over compensation and corruption will also be limited. Meanwhile investors won’t have to spend much on compensation and will be able to mobilise capital as soon as the project is implemented.
Experts advised real estate traders not to expect more bank capital or pin all their hopes on domestic capital sources. Foreign investment funds with strong financial resources are potential alternative capital sources, especially for the real estate market, which needs to be exploited.
The International Investment and Urban Development Company (IDJ) will hold some seminars calling for foreign investment in the real estate field. VinaCapital Investment Fund has increased its called-up capital to US$171 million and is mobilising US$50 million to set up a Vinaland Investment and Land Fund for major apartment, office, hotel, and luxurious commercial centre projects. This type of capital will be a driving force behind the real estate market.
Source: VOV news 11/06/2006
