Restructuring the capital and real estate markets

According to the MOF, the demand for house and apartment leasing remains very high, but the prices of luxury apartments have still decreased by 30%. Meanwhile, the total capital mobilized from bond issuance in the first ten months of the year has just fulfilled 52% of the targeted plan.

Real estate market ice: no signs of thawing

The demand and the driving force for the development of the real estate market remains very high. However, the high demand cannot defeat the economic slowdown and the barriers from the monetary policies to stimulate the market.

The MOF has reported that the real estate market has seen both the decreases in prices and transaction volume. The prices of apartments have decreased by 20-30%, while the prices of houses and villas have decreased by 30%.

A lot of factors have been influencing the market, especially the monetary policies. The loaning by the banks attracted many investors to join the market. However, when the monetary policies were tightened later, investors tried to sell out, leading to the sharp increase in the supply and sharp falls in prices.

Moreover, the restructuring of capital and investments by foreign investors has also pushed the market into crisis. The structure of the real estate market is also considered unreasonable, which explains why luxury commodities are abundant, and the commodities for medium and high income earners (95% of the total demand) remain short.

All of these factors, plus the fact that the economic recession is expected to prolong, have led to the forecast that the thaw of the real estate market is still a long way off.

Capital market: opening and developing in accordance with standards

2008 is considered a year where a lot of big changes occurred in the capital market. The capital mobilization through the state treasury channel has just fulfilled 42% of the plan, while 82% has gone through the bank.

Though Vietnam has offered an open policy for businesses to develop corporate bonds, no economic group, general corporation, or institution issued bonds in 2008. The bond prices have also been decreasing continuously on the secondary market.

The stock market has been falling sharply, which has also slowed down the equitisation process. Only 27 IPOs have been held so far this year, five new funds have been established as well as 13 new fund management companies. However, the capital scale and the market capitalization value proves to be very low.

The MOF plans to develop the bond market in the time to come, with the strengthening of the Government bonds issuance, local bonds and corporate bonds, and the suitable policies to access the international market.