HCM CITY — Property experts have called for drastic measures to diversify sources of capital, improve mechanisms to raise funding and mitigate legal issues in the property market to ensure healthy development.
Speaking at a conference last Friday, Cao Phi Vân, deputy director of the HCM City Investment and Trade Promotion (ITPC), said the city is the country’s leader in attracting foreign investment.
“The real estate sector is attractive to both local and foreign investors, but it faces a lot of problems related to legal procedures and capital sources, which affect foreign investment.”
It is necessary to attract more investment into the market, she said.
Experts said it is vital to diversify capital sources for the market to reduce its dependence on bank loans, and the credit flow should be directed towards target segments.
The credit flow should be directed towards affordable homes, especially social housing projects and projects for workers, to meet the demand caused by urbanisation and attract labour to key industrial and economic zones, they added.
Trần Du Lịch, deputy president of the Vietnam International Arbitration Centre, said tightening credit was necessary to ensure healthy market development and reduce threats to the economy, especially since most investors use financial leverage.
But he added that the central bank’s recent move to tighten credit to the property sector should only aim to limit speculation.
Otherwise it would make it difficult for home buyers and developers who have real demand for capital, he added.
Dr Cấn Văn Lực said the real estate market has a knock-on effect on four major economic sectors such as construction, tourism, finance, and banking, which account for 26 per cent of the country's GDP.
So it is important to ensure capital is available to the real estate sector through many various channels, including existing ones such as bank credit and bond issuance, he added.
Lê Hoàng Châu, chairman of the HCM City Real Estate Association, said the property sector accounts for 25 per cent of the national GDP.
But the market is falling into an imbalance due to limited supply as hundreds of projects face problems related to legal procedures.
He said the market remains largely dependent for funding on bank credit and bond issuances, which have been tightened recently.
They cannot mobilise funds from customers either due to their limited access to bank loans, he said.
“The recent illegal issuance of corporate bonds by a real estate corporation has affected the entire market, causing problems for other real estate enterprises seeking to raise capital through corporate bond issuance.”
Châu said corporate bond issuance should not be tightened immediately to prevent triggering market fear.
“If the brakes are put on too suddenly, it will cause shocks to the market and risks to the economy.
“The health of the real estate market reflects the health of the economy, and the latter cannot be strong unless the former is."
Lawyer Ngô Thị Vân Quỳnh of the HCM City-based AN Legal LLP law firm, said it is necessary to improve the country’s legal framework, including the Law on Housing, Law on Real Estate Business and Land Law.
The event was organised by the HCM City Investment and Trade Promotion Centre. — VNS