According to Bloomberg News, major construction companies across Vietnam have temporarily suspended construction projects1200 real estate projects, with a total value of nearly 80 billion Vietnamese đồng, about 34 billion US dollars. The Vietnamese Real Estate Association stated that out of all 63 provinces and cities in Vietnam, an average of 20 projects have been suspended in each province. The Vietnamese Youth Daily revealed that about 400 projects in the capital city of Hanoi have been put on hold, while the number of projects in the economic center of Ho Chi Minh City has exceeded 300.

In fact, the collapse of the Vietnamese real estate market showed signs as early as the beginning of this year.

Data display,In the first quarter of 2023, the supply of housing in Vietnam reached approximately 25000 units, with an absorption rate of only about 11%, which means approximately 2700 transactions were completed, a decrease of 50% compared to the same period in 2022. Especially in Ho Chi Minh City, the transaction volume of first-hand properties in the first quarter of this year decreased by 66% year-on-year, and the prices of second-hand properties also decreased by about 1% -6%.

The decline in real estate transactions has also triggered a chain reaction related to it. The famous Vietnamese real estate company Greenland Group, from last yearFrom the fourth quarter to the end of March this year, nearly 4300 employees were laid off.

Analysis and research show that the significant decline in the real estate industry in Vietnam is mainly due to the following two reasons.

The first reason isIn 2022, Vietnam began a financial anti-corruption storm, comprehensively reviewing various bond issuing companies, with real estate being the hardest hit area.

The most well-known case is the Vietnamese real estate giant New Emperor Group, which is suspected of embezzlement of property and amounts to up to10 trillion Vietnamese đồng, the company's chairman and related executives were prosecuted and arrested by the Vietnamese police; VietnamFounder of Wanshengfa GroupZhang Meilan, the richest woman of Chinese, was jailed on suspicion of illegally issuing bonds and raising trillions of Vietnamese đồng.

Vietnam's rampant crackdown on corruption in the real estate industry has to some extent affected the normal operation of the real estate market. Domestic practitioners are facing personal danger and have successively shelved their development plans and business deployments. Foreign investors will also be relatively cautious and hesitant.

The second reason is that the Federal Reserve has raised interest rates several times and the US dollar has strengthened. In order to stabilize the currency and balance the foreign exchange market, the Vietnamese central bank has recently raised interest rates and tightened the credit market, resulting in difficulties in domestic real estate loans and a lack of financial support, making it difficult to maintain multiple projects.

The Ministry of Construction of Vietnam has revealed that the main sources of real estate funds in the country are credit loans and bond issuance. Strict regulation has led to a significant decline in the issuance of bonds in the Vietnamese real estate industry. Nowadays, the credit squeeze has directly led to a shortage of funds for enterprises and delayed project implementation.

This will indirectly lead to the inability of Vietnamese real estate companies to repay their bank debts and bonds on time, forming a vicious loop. this yearIn February, No Va Land Investment Group, the second largest developer in the Vietnamese real estate industry, sought a debt extension due to its inability to repay its bonds on time. According to the data of the State Bank of Vietnam, as of February 28, 2023, the outstanding loan balance of Vietnam's real estate business has reached 859394 billion Vietnamese đồng.

As one of the important industries driving Vietnam's economy, a comprehensive collapse of real estate will lead to a rapid decline in surrounding industries, such as cement, sand, steel, and decoration. Taking Vietnam's steel industry as an example, this yearIn March, Vietnam's steel industry was only 2.146 million tons, a year-on-year decrease of nearly 16%.

Earlier, the report issued by the OECD said that Vietnam's economy is expected toFrom 2023 to 2024, Vietnam will maintain a growth rate of 6.6%, but industry experts predict that in such an economic environment, it will be difficult for Vietnam to achieve this goal.