(Bloomberg) -- Vietnam builders have suspended more than 1,200 real estate projects worth 800 trillion dong ($34 billion) as funding woes continue to beset the industry.
“A huge resource has been frozen and we don’t know how long it would last,” the Vietnam Real Estate Association said. “These halted projects are not creating added value for society but leading to multiple consequences.”
The property crisis — triggered by builders taking in too much debt, the Covid-19 pandemic that damped demand and a government crackdown on corruption — has affected more than 1,800 builders and forced 340 other companies into insolvency in the first quarter of the year, according to the construction ministry.
Each of Vietnam’s 63 provinces and cities had suspended 20 projects on average, the Hanoi-based real estate association said. While it declined to provide the number of projects stalled in the key cities of Hanoi and Ho Chi Minh City, Thanh Nien reported on Thursday that about 400 projects in Hanoi were on hold while the number for Ho Chi Minh City was at more than 300.
Novaland Investment Group, one of Vietnam’s top real estate developers that stopped several projects late last year, in May resumed work on a 39-story project called the Grand Manhattan in Ho Chi Minh City. Prime Minister Pham Minh Chinh this week directed the construction minister to work with the company’s chairman to removes obstacles faced by a project in Dong Nai province.
The number of Vietnamese property companies that closed in the first five months of the year surged 30.4% from a year ago to 554, state television VTV reported, citing information from the General Statistics Office. The number of newly established real estate businesses dropped 61.4% y/y to 1,744 in same period, according to the report.
--With assistance from Nguyen Kieu Giang and Nguyen Xuan Quynh.
(Updates with closed property companies in the last paragraph.)
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