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Real estate loans drop sharply in HCM City, rise slightly in Hanoi   2008-09-16 - VNN

The outstanding real estate loans in the two biggest cities, Hanoi and HCM City, have decreased from VND110tril at the beginning of 2008 to VND80.6tril now, according to the State Bank of Vietnam. The loans have been dropping sharply in HCM City and increasing slightly in Hanoi.


Banks keep cautious in loaning


Outstanding real estate loans in Hanoi and HCM City make up 82% of total such loans in the country, and HCM City alone makes up 64.4%.


Joint-stock banks prove to be the biggest real estate lenders. However, the high inflation, tightened monetary policies, frozen real estate market and low liquidity of banks in the first six months of the year all have forced banks to stop providing loans.


As a result, the outstanding real estate loans in HCM City had decreased to VND57tril by the end of August, a decrease of 33.8% over the beginning of the year. The ratio of these loans to total outstanding loans has also fallen from 20% to 11%.


Meanwhile, in Hanoi, real estate loans have seen a slight increase in the last two months. The outstanding loans had reached VND23.6tril by August 31, 2008, making up 9.97% of total outstanding loans in the city, an increase of 0.36% over the previous month. In July, outstanding real estate loans also rose by 1% over June.


Real estate loans in Hanoi have not seen as sharp a decrease as in HCM City because the real estate credit in the city has remained at a low level. The city has never witnessed overly hot growth in real estate loaning.


According to the Hanoi branch of the State Bank of Vietnam, several commercial banks in the locality have resumed real estate loaning, but only very tentatively. Outstanding real estate loan increases have been explained by the fact that it is now time for banks to make disbursements on contracts signed previously.


Real estate market promising in medium term


The real estate market, though remaining quiet, is expected to fully recover in the future.


Duong Nguyen Hung, General Director of Techconvina, a construction company, said that the market will warm up again in 2009. Therefore, investors should race against time to prepare for that moment.


“Those who start early will be the winners when the market prospers,” Hung said.


“If you get started this year, you will have something to sell next year, otherwise, you will miss the train,” he added


Nguyen Duc Toan, General Director of Ha Do Joint Stock Company, also said that his company is considering making investments in anticipation of the warming-up of the real estate market.


Foreign direct investment continues flowing into the real estate sector with the registered investment capital accounting for 50% of the total FDI registered capital.

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