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Vietnam’s real estate market: Hundreds of exchanges closed

Thursday 26, 03 2020
Although real estate is considered a long-term and sustainable investment channel, it is gradually absorbing the impact of the Covid-19 epidemic
Vietnam’s real estate market: Hundreds of exchanges closed

Vietnam Real Estate Association (VNREA) has sent a letter to the Prime Minister proposing to extend the tax payment to "rescue" real estate businesses that are facing difficulties caused by the Covid-19 pandemic.

This move of the Association aims to help real estate enterprises overcome Covid-19 “storm” because hundreds of businesses in other fields, tens of thousands of workers in construction, materials, tourism, resorts, etc. are dependent on real estate projects. If real estate goes into “hibernation”, it can cause a chain effect to other industries.

Fear of hibernation

Mr. Nguyen Van Dinh, Vice President of Vietnam Real Estate Brokers Association, said that since the spread of the Covid-19 epidemic, up to 1/3 of the total 1,000 real estate exchanges in operation have had to stop operation.

The others only operate moderately, handling contracts that had been signed since the end of last year. According to him, many exchanges are "crying" because in the past, their sales staff had an average of 3-4 potential customers who would be interested and even close orders. However, at present, the situation is becoming very difficult.

"A lot of customers are withdrawing money and suspending all investment activities. Although real estate is considered a long-term and sustainable investment channel, it is gradually absorbing the impact of the Covid-19 epidemic" Mr. Dinh acknowledged.

The real estate segment that is facing the most difficulties at the moment is resort real estate. Many investors believe that the Covid-19 epidemic will continue to be complicated and the number of tourists will not increase overnight.

Freezing tourism makes resort real estate heavily affected. That is also the difficulty mentioned by Mr. Nguyen Tran Nam, Chairman of Vietnam Real Estate Association when talking about the current real estate picture. According to him, members of the Association, on the one hand, are facing common difficulties, on the one hand, still have to bear a lot of fixed expenses such as investment costs, capital costs, and interest.

He has witnessed many businesses facing the risk of running out of cash flow and having to owe taxes and social insurance contribution. In addition, in the situation where businesses have to make two ends meet, real estate businesses are having to support their partners by reducing the rent price, extending the payment schedule or even exempt rent.

Many businesses are therefore worried that the market will fall into a "hibernation" period like 2011 - 2013. Of course, there is not a real estate bubble like before when prices have been adjusted, but with what is happening right now, that worry is not necessarily unfounded.

Vietnam’s real estate market: Hundreds of exchanges closed

Activate large assets for a more vibrant economy

Facing such difficulties, many real estate enterprises have sent petitions to the State management agencies. Mr. Nguyen Tran Nam said that recently Vietnam Real Estate Association has also sent a document to the Prime Minister, the Ministry of Finance and the General Department of Taxation asking for the addition of real estate enterprises to the list of those extended the time for paying value-added tax and land rent.

The representative of the real estate business also proposed to extend the time of corporate income tax and personal income tax. The Association also said that it is necessary to extend the time of the above-mentioned tax payment for enterprises to 1 year instead of 5 months.

According to economist Vu Dinh Anh, real estate is always a good investment channel with huge demand. Especially for developing countries like Vietnam, real estate demand is expected to remain high at least for the next 15-25 years.

Therefore, to support real estate at this time is to support economic growth in the context of epidemics. A strong real estate market will even be a factor for the economy to recover and be vibrant again. Economist Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management, said that real estate has a strong impact on the liquidity of an important industry chain such as construction, materials, travel, convalescence, etc.

This is also the field involved in regulation in many other economic sectors, such as labor supply, production, trade, investment, etc. Therefore, according to him, if real estate freezes, thousands of businesses will be “cornered”.

He expressed his belief that the Government will take strong measures to help businesses, including the real estate industry, recover quickly. "The state needs to drastically remove and solve difficulties for businesses. The economy can recover quickly after the epidemic." said former Deputy Director of the Central Institute for Economic Management.

​>> Industry forecast: Vietnam real estate 2020

Source: vietnamnet

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