Real estate prices 'peak' despite bond maturity pressure

Bond maturities peak

According to a report by financial data and analysis provider FiinGroup, more than VND100,000 billion worth of real estate corporate bonds are due for payment in the second half of this year. This figure shows the existing pressure on payment cash flow. This August, the amount of bonds issued by real estate companies due for payment peaked at about VND17,500 billion.

Statistics from VNDirect Securities Company show that in the third quarter of this year, the total value of corporate bonds maturing was estimated at VND67,000 billion, the highest level of the year. Notably, the real estate group accounted for more than 57%, equivalent to nearly VND38,200 billion, mainly bonds that have been extended since 2023.

Despite the pressure to repay bonds, many real estate businesses still maintain the strategy of "holding prices", not accepting price reductions to recover cash flow.

According to businesses, the main reason they cannot reduce prices is the pressure of capital costs and financial obligations to bondholders. Real estate bond lots currently have common interest rates of 10-12%/year, much higher than bank loan interest rates. If assets are sold quickly at low prices, the proceeds will not be enough to pay the principal and interest of the bonds, and may violate the terms of commitment to bondholders. Therefore, real estate prices in all segments have continued to increase sharply since the beginning of the year.

According to the Ministry of Construction 's report on the real estate market in the second quarter , the apartment segment in large cities is an exception, continuing to "reign" and establishing the highest price level in nearly a decade.

In Hanoi , the average selling price in the second quarter reached VND80 million/m2, up 5.6% compared to the previous quarter and up to 33% compared to the same period last year. According to the survey, many apartment projects in Hanoi recorded a price increase of about 5-6%. In particular, some high-end projects recorded "shocking" selling prices such as the Noble Crystal project at VND160-270 million/m2, The Matrix One at VND120-150 million/m2.

This August, the amount of bonds issued by real estate businesses maturing peaked at about 17,500 billion VND. Illustration photo: VOV.

In Ho Chi Minh City, the average apartment price reached VND89 million/m2, not much fluctuation compared to the previous quarter but increased by about 36% compared to the same period last year. Although generally stable, some luxury segments still recorded local increases and established new price levels, mainly thanks to outstanding infrastructure advantages such as Metro lines, beltways, Cat Lai tunnels and the expansion of many key routes in Thu Thiem, Thao Dien, An Phu, Thanh My Loi.

The villa and townhouse segment in the project also recorded a slight increase compared to the previous quarter, notably in Ho Chi Minh City and Khanh Hoa .

Bond default unlikely

Experts at SSI Securities Corporation assessed that the strategy of maintaining real estate prices to survive will only last for a short time. If market confidence continues to decline, the “holding breath” state will no longer be a solution but will become a widespread liquidity risk. Therefore, strong and synchronous solutions and policies are needed to reduce maturity pressure and restore market liquidity.

Experts said that, in the immediate future, the mechanism for issuing individual bonds needs to continue to be improved in the direction of mandatory information disclosure, periodic auditing and strengthening independent credit ratings; it is necessary to expand the legal framework for debt restructuring such as converting bonds into shares, or conditional extension for projects with full legal status and clear progress.

The strategy of keeping real estate prices low to survive only lasts for a short time. Illustrative photo.

In the long term, credit for the real estate sector needs to be selectively regulated, prioritizing social housing and rental housing, and limiting capital flows into speculative projects. The real estate market is gradually improving, as long as businesses can sell their products, bond maturity will no longer be a concern.

Dr. Can Van Luc - Chief Economist of BIDV - commented that the pressure on bonds this year is not worrying. Defaults are less likely to happen because the real estate market has gradually become more positive. Many businesses only need to set a product discount of about 10% to sell their products, instead of 40-50% as in the previous period.

According to analysts, the real estate industry continues to grow strongly this year. The whole country has completed the rearrangement of administrative units and stabilized the political environment. The real estate industry is benefiting from the low interest rate environment and institutional reforms. The three laws on real estate, the resolution on piloting the implementation of commercial housing projects through agreements on receiving land use rights, efforts to boost public investment and cut administrative procedures...

The Government's recent efforts to remove legal obstacles for real estate projects will create conditions for businesses to restore project implementation and improve cash flow, making it easier for businesses to open for sale soon and have financial plans to repay debt to bondholders.