Vietnam real estate firms sell projects to pay loans

TN News

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Many developers in Vietnam are selling their projects to other companies as the prolonged market slump has made it difficult to repay bank loans, an industry group said.

Le Chi Hieu, vice chairman of the Ho Chi Minh City Real Estate Association, said property firms are facing many difficulties, including high interest rates.

Unable to find enough money for maturing loans, many developers have had to sell their projects, Hieu said, noting the trend will continue considering the current market situation.

Chairman Le Hoang Chau said under loan repayment pressure, many companies are seeking a way out through merger and acquisition deals, on both project and company levels.

Chau said local developers should consider working together to survive these tough times instead of having to sell their projects at low prices. Some companies are already following this path, he said, citing the Phuoc Long Spring Town residential project in District 9 as an example. The project, expected to cost VND1 trillion to build, is developed by four companies.

Analysts said it is likely that many valuable projects will be taken over by foreign real estate companies. However, they also said the difficulties will help make local companies stronger.

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Neil MacGregor, deputy managing director of Savills Vietnam, said in August that developers in Vietnam were seeking new financing sources. The options include outright project sales, en bloc sales of residential units or joint venture partners, he added.

JSM Indochina Ltd. recently sold a project in District 2 to Sao Sang Saigon Joint Stock Co. for US$11 million. Another real estate company, Khang An, also plans to sell 80 percent of one of its projects at more than VND300 billion.

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