Real eState

Vietnam’s real estate woes: how much worse can they get?

Published

1 year ago

October 26, 2023

HANOI, Oct 26 (Reuters) – A rough year for Vietnam’s real estate sector has seen developers miss interest payments on debt, amid a credit crunch spurred by ill-timed government measures, although spillover risk has been limited.

The sector was the worst performer last month on the falling Ho Chi Minh City stock exchange (.VNI), with a drop of nearly 16% on the month, says key Vietnam investor Dragon Capital.

That capped two years of turmoil in developers’ shares that spread last year to corporate bonds, hitting project development and leaving ghost blocks of high-end property.

WHICH DEVELOPERS ARE IN TROUBLE?

No Va Land (NVL.HM) is the largest listed developer to face problems, with its shares down more than 80% in a year, after missing interest payment deadlines on domestic and foreign bonds that triggered a standoff with some international creditors.

Shares of the largest listed developer, Vinhomes (VHM.HM), part of the country’s biggest conglomerate, Vingroup (VIC.HM), have fallen 13% this year.

Other non-listed companies who defaulted recently include Hung Thinh Corp, a major developer in southern Vietnam, and Van Thinh Phat, whose chairwoman was arrested in a graft crackdown last year, according to VISRating, which is partly owned by Moody’s.

Buildings stand empty with interiors unfinished in developer Sun Group’s “Mediterranean town” on the southern island of Phu Quoc, while the skeletons of incomplete high-rises flank shiny towers in Hanoi built by another developer, Sunshine.

And the pressure is mounting, with real-estate bonds of about $6 billion set to mature each this year and the next, nearly three times more than in 2022.

HOW LIKELY ARE SPILLOVER RISKS?

In September, the Asian Development Bank warned of potential spillover into banking from irregularities in corporate bonds and real estate markets, although troubled bonds made up just a small portion of total bank credit.

Jean Xavier of S&P Global said there was “no risk of massive contagion”, but warned about a slowdown in key consumer sectors and the negative impact on areas closely linked to real estate, such as construction and building products.

WHICH BANKS ARE MOST EXPOSED?

The banking system’s exposure to the property sector amounts to about 25% of total loans, says S&P Global, mostly through mortgages, which are not viewed as risky, however, thanks to robust employment.

Corporate bond holdings are about 3% of banks’ total loans, said S&P Global, which estimated between a third and a half were related to property.

The banks most exposed to the sector are Southeast Asia Bank (SSB.HM), Maritime Bank (MSB.HM), Asia Commercial Bank (ACB.HM), Vietnam Prosperity Bank (VP Bank) (VPB.HM) and Sacombank (STB.HM), 2022 data cited by VISRating shows.

Of these, only VP Bank ranks among the biggest lenders.

HOW DID THE TURMOIL START?

Analysts blame the worst troubles on a long-running graft campaign that authorities stepped up at the end of last year.

They see the Oct. 2022 arrest over financial fraud of Truong My Lan, chairwoman of Van Thinh Phat Holdings Group, as a turning-point after which confidence dropped.

The arrest followed tougher rules on transparency and private placement of corporate bonds adopted that September, and coinciding with an economic slowdown, so that authorities were forced to suspend them a few months later, as the market froze.

Bond issuance drew to a halt and bank loans fell, spurring the government to repeatedly urge lenders to boost credit.

IS VIETNAM A NEW CHINA?

While ill-timed government measures, companies’ high debt and oversupply are responsible for the sectors’ woes in both countries, conditions are different in Vietnam.

Its long-term prospects are more positive, said S&P’s Xavier Jean, as a younger population and an expanding middle-class are set to keep demand for property high.

Vietnam has a less acute situation of oversupply and speculation than China, he added, while real estate’s contribution to its economy is also smaller.

($1=24,606 dong)

Reporting by Francesco Guarascio @fraguarascio and Phuong Nguyen; Editing by Anne Marie Roantree and Clarence Fernandez

Our Standards: The Thomson Reuters Trust Principles.

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Real eState

‘The Bidding War’ taps into Toronto’s real estate anxiety

Published

6 days ago

November 12, 2024

Anne Joseph

‘The Bidding War’ is a play skewering Toronto’s real estate market via a story about a one-day bidding war over the city’s last affordable home. The cast and crew say it exposes how the housing crisis brings out “the worst in people.” (Nov. 12, 2024)

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

2 weeks ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Homelessness: Tiny home village to open next week in Halifax suburb

Published

4 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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