Fitch Ratings:Vietnam Real Estates Sector Outlook Deteriorating Contracted Sales to Dip

30/11/2022 15:00 English Diep Nguyen
Fitch Ratings expects rated homebuilders’ aggregate contracted sales in Vietnam to fall year-on-year in 2023.
Fitch Ratings believes the supply of homes in Vietnam ’s market will be curtailed as more developers postpone launches amid tightening liquidity in the sector. Demand should remain supported by the country’s strong economic fundamentals; Fitch Ratings forecast real GDP to expand by 6.2% (2022 estimate: 7.4%), but there is a risk that consumer sentiment for property purchases will deteriorate if more scandals surface amid the government’s anti-corruption crackdown.

Rising Cash Outflow on Land Payments to Pressure Leverage

Fitch Ratings forecasts decreased FCF in 2023 due to lower contracted sales and rising costs, while companies are likely to continue making committed payments on land bank and licensing and zoning. This, together with lower availability of mortgage-funded home sales, will push up leverage. However, most rated homebuilders have strong balance sheets to absorb a degree of deterioration over the next 12 months without impacting ratings.

The mix of mortgage-funded home purchases is likely to fall due to tighter bank credit and rising interest rates. HSBC expects this to pressure homebuilders’ balance sheets, as cash disbursement to developers from consumer mortgages are faster than if homebuilders offer instalment-based repayment schemes. Fitch Ratings believes the government will proactively adjust credit growth targets to support the economy if required, as a sharp drop in demand would have a knock-on impact on related industries.

Tightening Liquidity

Fitch Ratings expects higher liquidity and refinancing risks in the next 12 months. This will be more pronounced at homebuilders with lumpier cash flow, concentrated funding sources and high nearterm maturities. Declining contracted sales could also pressure liquidity, driving negative rating action as homebuilders slow project launches due to scarcity of funding for development costs, land purchases and related payments. Against this backdrop, we believe issuers will rely more on internal cash to repay debt, fund investments and working capital.

Easing Credit Controls May Improve Outlook

Eased regulatory credit tightening in the property sector could see the sector outlook change to neutral or improving. However, we believe restrictive lending policies will stay in place at least through 1H23, as the government remains focused on controlling inflation and preventing assetquality deterioration in the banking system. This follows a number of high-profile scandals in the real-estate sector relating to the misuse of bond proceeds and share-price manipulation. The government has since tightened rules around private bonds to reign-in risk.

Các tin khác

Standard Chartered Forecast Vietnam 2023 GDP Growth at 7.2%

Standard Chartered Forecast Vietnam 2023 GDP Growth at 7.2%

“We still have conviction on Vietnam’s high growth potential over the medium term.” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered.
Tough year expected for banks in 2023

Tough year expected for banks in 2023

With a dim outlook for the banking industry, most securities firms forecast that banks will post conservative profit growth in 2023.
Vietnam’s Hiking Cycle Under Way, HSBC Says

Vietnam’s Hiking Cycle Under Way, HSBC Says

In the latest report by HSBC, it is said that rising core inflation increasingly suggests the SBV’s hiking cycle is still under way.
Amazon Global Selling Vietnam Reveals its 2022 Vietnam SMEs Empowerment

Amazon Global Selling Vietnam Reveals its 2022 Vietnam SMEs Empowerment

Amazon Global Selling officially released the 2022 Vietnam Small and Medium Businesses (SMBs) Empowerment Report, which reflects a flourishing year of Vietnamese online export via cross-border e-commerce on Amazon.
Vietnam: Bracing for a Trade Winter

Vietnam: Bracing for a Trade Winter

After growing over 17% y-o-y in the first three quarters of 2022, export growth of Vietnam sharply moderated in October, with November seeing the first meaningful y-o-y decline in two years.
Asia Economies to Benefit from China’s Opening in Second Half 2023

Asia Economies to Benefit from China’s Opening in Second Half 2023

All considered, Asia economies proved surprisingly resilient in the Year of the Tiger. True, surging living costs squeezed the pockets of consumers and bottom lines of many businesses.
One More HDBank Leader Registered to Buy HDB Shares

One More HDBank Leader Registered to Buy HDB Shares

Deputy General Director of Ho Chi Minh City Development Commercial Joint Stock Bank. Ho Chi Minh City (HDBank) registered to buy 120,000 shares of HDB.
Sign of a Loan Agreement for Ninh Thuan Province Onshore Wind Power Project

Sign of a Loan Agreement for Ninh Thuan Province Onshore Wind Power Project

The project in Ninh Thuan Province will help Vietnam to reach its clean energy and climate action targets by offsetting about 215,000 tons of carbon dioxide annually.
ADB, BIM Wind Sign $107 Million Financing Package to Support Wind Energy in Viet Nam

ADB, BIM Wind Sign $107 Million Financing Package to Support Wind Energy in Viet Nam

The wind energy power plant will help Viet Nam reach its clean energy and climate action targets by offsetting about 215,000 tons of carbon dioxide annually.
International Agreement to Support Vietnam’s Ambitious Climate and Energy Goals

International Agreement to Support Vietnam’s Ambitious Climate and Energy Goals

The Partnership will support Vietnam to deliver on its ambitious Net Zero 2050 goal, accelerate the peaking of its greenhouse gas emissions and transition away from fossil fuels to clean energy.
Vietnam to Receive $15.5 billion for Energy Transition

Vietnam to Receive $15.5 billion for Energy Transition

Vietnam has landed a $15.5 billion partnership with funders led by the European Union and the UK to help finance its transition away from coal.
FPT Announced Business Results in the 11 Months of 2022

FPT Announced Business Results in the 11 Months of 2022

Recently, FPT Software has expanded its presence in Southeast Asia with the opening of a new office in the center of Bangkok, Thailand.
ADB Lowers Growth Forecast for Developing Asia amid Global Gloom

ADB Lowers Growth Forecast for Developing Asia amid Global Gloom

The Asian Development Bank - ADB has lowered its economic growth forecasts for developing Asia and the Pacific amid a worsened global outlook.
Amazon Announces its Biggest Holiday Shopping Weekend Ever

Amazon Announces its Biggest Holiday Shopping Weekend Ever

Amazon announced that this year Thanksgiving holiday shopping weekend was its biggest ever, with customers around the world purchasing hundreds of millions of products across Thanksgiving, Black Friday and Cyber Monday.
Unilever Vietnam to Consolidate the Position in Circular Economy

Unilever Vietnam to Consolidate the Position in Circular Economy

Unilever Vietnam 's efforts on plastic waste management in particular, and sustainable development in general, are recognised at CSR Awards by Saigon Times Groups.
HSBC: The Vital Role of Voluntary Carbon Markets

HSBC: The Vital Role of Voluntary Carbon Markets

The voluntary carbon market, when used by companies to complement – not substitute – the decarbonisation of their own operations as they transition to net zero, is one tool that could accelerate action to tackle climate change, HSBC remarks.
Archetype Group Celebrated 20 Years of Growth

Archetype Group Celebrated 20 Years of Growth

Archetype Group was established in 2002 in Vietnam by a group of French entrepreneurs. Over the years, it has expanded its operations to 18 countries, employing more than 1000 collaborators.
ADB, HAYAT KIMYA to Support for Women and Children’s Lives in Vietnam

ADB, HAYAT KIMYA to Support for Women and Children’s Lives in Vietnam

In Vietnam, ADB announced that it is estimated that only 43% of women have access to sanitary pads while only 52% of mothers use diapers for their infants.
HDBank is the Large-Cap Listed Company With the Best Annual Report 2022

HDBank is the Large-Cap Listed Company With the Best Annual Report 2022

The poll of large-cap listed companies in 2022 jointly held by Ho Chi Minh City Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) and Investment Newspaper on December 02 has honored HDBank as the top bank in the category of the best annual report.
Sobanhang Excellently Won the Champion of National Innovative Technopreneur Contest

Sobanhang Excellently Won the Champion of National Innovative Technopreneur Contest

This is the final round of a 3-month contest journey of supporting innovative startups in Vietnam and Vietnamese individuals living and working outside Vietnam.
Xem thêm
Phiên bản di động