Reports show that the real estate market is gradually recovering but the burden of inventory still weighs heavily on businesses.

Many real estate businesses have inventory accounting for 50% of assets.

Although the market has shown signs of improvement in the first months of the year, inventory continues to increase, especially projects facing legal problems or products that do not meet market demand.

Novaland's financial report shows that as of June 30, Novaland's inventory increased to VND142,024 billion, while as of December 31, 2023, the company's inventory was only VND138,935 billion. In Novaland's inventory structure, nearly VND134,000 billion is real estate for sale under construction and 8,380 real estate for sale that have been completed.

Meanwhile, as of the end of June, Novaland's total assets were VND240,178 billion, meaning inventory accounted for more than half of the company's total assets.

Another large real estate enterprise, Vinhomes, also has an inventory of VND56,311 billion as of June 30, a slight increase compared to the end of last year when on December 31, 2023, the inventory was VND55,318 billion. Of which, the inventory of real estate under construction is VND48,618 billion. With total assets of VND494,460 billion, Vinhomes is an enterprise with an inventory that is high in value but low in proportion to total assets, at just over 11%.

In the Southern market, Nam Long Real Estate had inventory in the first half of the year at VND19,164 billion, an increase of nearly VND2,000 billion compared to the end of last year (VND17,352 billion). With total assets reaching VND29,731 billion, Nam Long's inventory accounted for more than 64%.

Specializing in housing development in Ho Chi Minh City, Khang Dien Group also has a high inventory of up to VND21,458 billion, while at the end of last year it was only VND17,786 billion. On June 30, Khang Dien's total assets reached VND28,401 billion, with an inventory ratio of 75%.

Phat Dat Real Estate also saw a slight increase in inventory, reaching VND12,523 billion on June 30, up from VND12,199 billion at the end of last year. This inventory accounts for more than half of Phat Dat's total assets by the end of the second quarter of 2024 (VND22,536 billion).

Dat Xanh Group's inventory reached VND13,896 billion, a slight decrease compared to the end of last year but still accounting for 47% of the company's total assets (VND28,955 billion).

Don't let inventory become a "blood clot"

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that inventory is normal if it is part of the business plan and strategy of the enterprise. The worrying problem with inventory is that the products have been completed and sold on the market but are not accepted by the market, meaning the liquidity is low.

According to Mr. Chau, large inventories for weak businesses, using high financial leverage will be a mountain of debt weighing on the business's shoulders, when there is no liquidity, the business will face difficulties.

Meanwhile, the director of a real estate business in Ho Chi Minh City said that the above inventory figures for listed businesses do not fully reflect the market because there is a large amount of real estate lying "inactive" in unlisted businesses and secondary investors, making inventory a "blood clot" for the market.

This director cited evidence that even on the books of listed companies, this inventory does not fully reflect its nature. In fact, there are real estate companies that have sold to secondary companies, accounting for no inventory, but in fact this is inventory pushed to other companies, posing many potential risks to the economy.

Therefore, he believes that it is important for project development enterprises to restructure products and prices, helping to increase liquidity and avoid increasing inventory, which will increase bad debt ratios and reduce credit safety.