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US $1 billion at least injected in real estate   2009-03-16 - VietNamNet/VnMedia

One billion US dollars has been reportedly poured into ten big projects in the real estate market so far this year.


Real estate projects still thirsty for money


While keeping cautious with funding real estate projects, bankers seem to open their doors widely to welcome individuals who seek loans to purchase houses and apartments

In February, Vietcombank lent US $44 million to Indochina Land to fund the investor’s development of the complex of trade centre, office and apartments in Hanoi, capitalized at US $145 million.


The Bank for Investment and Development of Vietnam (BIDV) in January lent VND 5.7 trillion to the Hoang Anh Gia Lai group which Hoang Anh will inject in its real estate, rubber, minerals, and hydropower plants in 2009-2011. This includes VND 650 billion in short term capital, while the remaining are medium and long term loans. In mid-February, Fei Yueh Vietnam kicked off its project on five star hotel Nikko Saigon on Nguyen Van Cu Road in district 1, HCM City, which has the investment capital of US $100 million.


Banks have resumed funding real estate projects so far this year. If considering the ten large real estate projects in Hanoi and HCM City alone, it is estimated that close to US $1 billion has been injected in the real estate market. Meanwhile, the total sum of capital injected in the real estate market in 2008 was VND 115 trillion, or US $6.7 billion. As such, the US $1 billion worth of capital injected in the market so far this year shows that investors and bankers still remain hesitant with real estate investments.


Meanwhile, bankers, when asked about the plan to fund real estate investment projects, all said that they are ready to provide loans, provided that the projects are feasible.


Vietcombank’s Chairman Nguyen Hoa Binh said that Indochina Plaza Hanoi proves to be a good project that Vietcombank has decided to fund.


General Director of Techcombank Nguyen Duc Vinh also said that the bank is providing loans selectively.


Vo Dinh Quoc, Deputy Director of Dien Luc Real Estate Joint Stock Company, said that a lot of projects have been kicked off with the funding from financial institutions, but many others have been transferred to other investors, though the interest rates have become at ease for the last few months.


Banks pushing up loans to fund house purchases


The difficulties in accessing bank loans have prompted real estate enterprises to seek capital through bond issuance.


In early 2009, Hoang Anh Gia Lai issued VND 350 billion worth of bonds. Vinaland has issued 100 housing saving certificates to mobilize capital for its projects.


While keeping cautious with funding real estate projects, bankers seem to open their doors widely to welcome individuals who seek loans to purchase houses and apartments. Most bankers said that they plan the loans worth several trillions of VND to fund the purchases. Vietcombank is now working with Indochina on providing loans to the buyers of Indochina Plaza Hanoi’s apartments.


Vinh from Techcombank said that the bank will reserve between VND 1.5-2 trillion for the program on funding new house purchases and repairs.


Tran Phuong Binh, General Director of East Asia bank, said that the bank has reserved VND 4 trillion for consumer credit. An Binh bank has launched a promotion program under which borrowers have the chance to get the prizes in gold.


As such, if a bank has VND1.5-2 trillion for the program on funding house purchases on average, the total capital to be injected in the market would be between VND 65-86 trillion.


Explaining why bankers push up the loaning to fund house purchases, analysts said that the capital is being provided to those who really have the demand for accommodations. The borrowers are the ones, who have income independent to the real estate market, i.e. the income is not influenced by the real estate market’s ups and downs.

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