Vietnam Real Estate Market

At a seminar in Hanoi last week, banking officials said the real estate market’s stagnation has increased the risk of default by developers, most of them are not strong enough financially. They said more bad loans would surface if the market continued its stagnancy. It is estimated that 60% of the capital for real estate development comes from loans.

Figures from commercial banks show that the loans made up 10% of total lending last year, equivalent to VND50 trillion. Bad loans made up about 2%. Loans for the property sector in HCM City are estimated at VND25 trillion and Hanoi VND9 trillion. The central bank has recently issued an instruction asking commercial banks to assess their property lending to make sure they could get back their money on time. The central bank’s local branches in provinces and cities must closely watch real estate development to warn credit organizations of default risk in time. Central bank warns about property loans. The State Bank of Vietnam has issued a warning against property lending, which makes up a large share of total lending in the banking system.