Hundreds of Vietnam property firms have shut down as crisis in sector still persists

HANOI, April 25 (Bloomberg): More than 1,800 companies engaged in developing and selling properties in Vietnam have suspended operations in the first quarter in signs of a lingering strain in the sector beset by funding woes.

That number has jumped 61% from a year earlier while the new property companies that opened in the first three months of 2023 plunged 63%, according to the country’s construction ministry. Some 340 other companies were dissolved in the same period, it said.

Vietnam’s real estate firms have to restructure businesses and debts, downsize operations and cut staff, with one company that wasn’t identified needing to reduce as much as 50% of its staff to deal with headwinds, the ministry said on its website.

The property sector grappled with challenges accessing loans, selling bonds and raising funds that led to suspended projects, it said.

The latest data amplifies the message of Prime Minister Pham Minh Chinh over the weekend that struggling companies must be aided to shield one of Asia’s fastest-growing economies after gross domestic product expansion slipped to 3.32% in the first quarter.

Vietnam, which rarely posts less than 5% growth before the pandemic, is taking a hit from slowing global demand exacerbated by funding woes amid the government’s anti-graft campaign that’s deterred investors.

Bond sales and initial share sales have been lackluster at best.

The 0.82% contraction of Vietnam’s construction sector is one of the key factors that caused GDP to grow at a much slower pace than expected in the first quarter. - Bloomberg