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Abandoned for many years, discounted many times, but a number of buildings for sale still have no buyers.
Race to sell
According to JLL, real estate mergers and acquisitions in the first 9 months of 2020 saw a slowdown in number. This is explained by many subjective and objective reasons. Meanwhile, sales activities are increasing.
The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) announces the selection of a debt auction organization from Tai Nguyen Production and Trade Construction Company Limited. The auctioned asset is the entire capital and interest arising at the time of the auction (temporarily as of March 29, 2020) that exceeds 4,063 million VND.
The Kenton Residences project is invested by Tai Nguyen Company. According to initial planning, the project had an area of 9.1ha, which included 9 towers of 15 to 35 floors, 1,640 luxury apartments and 20,000 m2 of shopping center. The total investment capital is $ 300 million.
The project started in 2009, but in 2011 the whole project has stopped being built. In 2017, Kenton Residences was rebooted, renamed Kenton Node, and kept to schedule.
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| A series of projects for sale without buyers |
BIDV branch Gia Dinh also issued a notice to release 65 apartments in the Ky Nguyen apartment building (District 7, Ho Chi Minh City), invested by Duc Khai Joint Stock Company. The initial sale price ranges from 2188-5.4 billion VND / unit, the area is from 135.98 m2 to 368.45 m2. Therefore, the average sale price is only 15-16 million VND / m2, including value added tax (VAT).
This is the third time that BIDV has offered to sell apartments in the Ky Nguyen apartment. The first offering took place in October 2019, including 27 units and BIDV sold only 1 unit.
From the beginning of the year until now, many banks have massively offered to sell a series of properties to recover debts. VietinBank announces the auction of collateral, which are rights to use land, home ownership and other land-related assets in the 3.23 ha Can Tho Center Business Complex, the starting price is 190 billion dong.
On its website, SCB Bank also directly offers the sale of 10 properties, which are real estate of lesser value, ranging from several billion to hundreds of billions of dong. Among them, one property offered for sale by SCB for VND 830 billion is the Phuoc Son warehouse in Thuan An (Binh Duong) city. SCB is also offering for sale other assets, including residential houses and land use rights, worth between VND 2.2 billion and VND 10 billion.
According to financial expert Dinh The Hien, the auction of real estate guarantees in commercial banks has taken place quite recently, whereas before that, the guarantees were real estate. through many channels, in many different ways, not just primarily commercially available today.
“This can be seen as an opportunity for people who want to search for properties at good prices. From the buyer’s perspective, choosing to pay attention to legality, the consensus of the owner, the legal rights to buy, the right to sell. If not it is strict, it can lead to lengthy trials, ”said Mr. Hien.
Discounts are still boring
Despite the price reduction, many properties for sale have not been successful. For example, the Hung Ngan House Joint Stock Company guarantee, after 4 times of auction, the price decreased by tens of percent compared to the initial offer, still unable to find a buyer. In the latest auction, BIDV offered to sell the debt at the initial offering price of almost 396 billion dong. Compared to the first auction in February 2020, the sale sale price has decreased by almost 24%.
The number of M&A transactions in the housing segment has slowed somewhat this year mainly due to the impact of Covid-19, the long-term real estate project review process, and credit quality control. in real estate.
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| Long-abandoned trillion project |
JLL representatives said that the Covid-19 epidemic inevitably affects real estate companies. Unlike peak years, in general, there will be a number of national real estate companies that face market liquidity problems.
According to Mr. Su Ngoc Khuong, Senior Director of Savills Vietnam, in 2011-2012, foreign investment funds participating in the Vietnamese market were primarily “corpse hunters”, seeking opportunities to acquire and buy back. . Their “taste” at this stage when they decide to buy a project often expect returns to be between 8 and 10%.
“As for the year 2020, the projects with a rate of return of 5% are also looking to buy a lot. 3-5 years later, they will transfer them again,” Khuong said.
The reason is that the real estate group that generates cash flows such as operating buildings, hotels, shopping centers, retail … is strongly affected by the Covid-19 epidemic, in terms of income. and costs.
According to JLL, the cost of capital for Vietnamese investors will tend to rise to offset more risks in the context of the epidemic affecting the world economy and Vietnam is no exception. .
Many real estate companies in Vietnam have difficulty accessing commercial bank loans, although loan rates have decreased due to non-compliance with loan conditions.
Foreign investors will also be more cautious in their capital investment. Mergers and acquisitions are not the only way to grow a business because there are many alternatives to tap into larger sources of capital. However, companies still need to ensure clarity and transparency to be prepared to participate in the potential but also challenging capital market.
From continuing to improve transparency and disclosure of a portfolio of good assets, high investment efficiency, greater banking support and greater flexibility for investors, JLL said that next time there will be more transactions through this investment channel.
Duy Anh
