The low liquidity of the apartment market not only leaves
a negative impact on project owners but on construction firms as well.
Le Viet Hai, board chairman of Hoa
Binh Construction and Real Estate Corporation (HBC), said that business
operations of property firms were encountering difficulties and some have lost
solvency.
Besides, several office and
commercial center projects have also seen low sales, resulting in financial
problems to property firms and late payments to contractors.
Therefore, contractors execute
slowly or even stop work while some property firms decide to delay their
projects due to lack of capital.
In fact, in addition to loans
from banks, property owners cannot pay building expenses if their apartments
are not sold.
The tough property market has
been expected but perhaps no one can expect that the market will be this
sluggish, according to Nguyen Ba Duong, general director of Cotec Construction
Joint Stock Company (Coteccons)
Spreading investments in too
many property projects is one of the reasons for capital shortage, and even
many large firms have also run into difficulties, said Duong.
However, the number of new
projects this year is fewer than that of last year due to the tough market and
tightened property loans.
Like HBC, Coteccons, one of the
big contractors, is working on projects it signed last year and this year worth
a total of around VND5 trillion, and thus the firm’s operation is not affected
much. However, small contractors will have to face many challenges next year,
Duong said.
He said the property market
would remain in difficulties over the next six months. As a result, there will
be many contractors having no projects or earning modest profits.
According to the Ministry of
Construction, Vietnam has around 36,000 construction firms. Besides, the
construction industry contributed 7% to the gross domestic product (GDP) last
year and attracted around three million workers.
Dinh Dung - The Saigon Times
Daily
Business & Investment Opportunities
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