Real estate project developers are scrambling to deal with unsold inventory.

However, after handover, the project still had a large number of unsold units, considered inventory. To address this issue, the developer launched a sales policy where customers only paid 10% of the apartment value, signed the purchase agreement, and moved in immediately; 20% was paid over the next 12 months, and the remaining 65% was paid 24 months later.

In addition to the above policy, many apartment buildings with unsold units are being handled by developers through monthly rentals, in two forms: renting unfurnished units (with only basic furniture) and renting units with basic furniture (beds, wardrobes, tables and chairs).

This strategy is proving quite effective and is also being implemented at several other companies, such as Bcons, Novaland , and Dat Xanh…

For townhouses and villas, developers are also following this approach, such as the Dragon City project in Nha Be district (Ho Chi Minh City).

Due to cash flow pressure, many developers are also implementing other demand-stimulating policies. For example, at the Summerland Mui Ne project, to raise capital from unsold inventory, the company had employees sign sales contracts, with each employee from department head level and above purchasing several units. They then secured bank loans, thereby obtaining working capital for the company. When customers expressed interest in purchasing a unit, the developer would release the loan and sell the unit to the actual buyer.

This is also the approach taken by other major real estate companies in Ho Chi Minh City in their projects.

Is excess inventory a concern?

According to the latest report from the Ministry of Construction , the inventory of real estate in projects across 56 provinces and cities nationwide in the first quarter of 2024 was 23,029 units (including apartments, detached houses, and land plots). Of these, 3,706 were apartments; 8,468 were detached houses; and 10,855 were land plots. However, the actual inventory is believed to be much higher.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, believes that this figure is not entirely satisfactory and does not fully assess the inventory problem, especially for businesses with large inventories.

"This assessment could lead to the misconception that the current real estate inventory is very small and not a cause for concern, while in reality, the inventory is still very large and needs special attention to ensure liquidity and the stable and healthy development of businesses and the real estate market," Mr. Le Hoang Chau emphasized.

According to Mr. Le Hoang Chau, planned real estate inventory and inventory in the distribution and circulation process are normal occurrences. What is concerning is inventory that has been put on the market but not yet sold, as this relates to the liquidity of the business and its credit relationship with commercial banks regarding bad debts and credit safety.

Mr. Truong Van Thanh, General Director of Tay Nam Real Estate Joint Stock Company, said that in reality, after each project is built and handed over, there is always a certain amount of unsold inventory, at least 10% for apartments and 30% for townhouses, villas, and land plots. Most of these unsold properties are in unfavorable locations, making them difficult to sell, even with price reductions compared to other properties in the same project.

According to Mr. Thanh, large inventories are a burden for businesses. However, selling this quantity is not easy, because over time, newly launched projects will attract more customer attention.

The story Mr. Thanh presented is well-founded. For example, in 2018, Cat Tuong Group developed and sold units in the Cat Tuong Western Pearl urban area, covering 80 hectares. In 2019, the company launched the Cat Tuong Phu Hung project, with an area of ​​92 hectares in Binh Phuoc province. However, after many years of development, the unsold units in these two projects still account for about 30%. Meanwhile, newer projects in the surrounding area consistently have quite good sales.

"With the current level of inventory, I believe that businesses should adopt more innovative strategies in their business policies so that inventory remains a profitable asset for the company, rather than a source of bad debt," Mr. Chau said.