Although the industry is assessed to have large capital needs and face difficulties from credit restrictions. However, the capital mobilization mechanism of enterprises real estate is still more favorable than other industries when it can mobilize capital from many sources.
In which, there is an important source of capital from customers in advance through deposit contracts, capital contribution contracts when the project is not eligible for sale, to house purchase contracts formed from the future.
In addition, real estate enterprises also mobilized large capital from issuing shares. From 2016 up to now, listed real estate and construction companies have recorded a very strong increase in capital from equity mobilization, with a large share capital second only to other listed companies. bank commerce.
In the period of 2020 – 2021, real estate companies also mobilized capital from bond issuance with a value of up to VND 600,000 billion – VND 800,000 billion, which is higher than the total credit balance of the bank. commercial real estate and no other business industry can mobilize such large capital. That proves the fact that the capital mobilized into the real estate industry is very large, surpassing other industries.
However, due to the type invest real estate has the characteristics of using large capital, slow capital turnover; Besides, many real estate companies want to develop land bank, doing many projects at the same time that exceed their financial capacity.
Therefore, real estate companies are always in a state of thirst for capital, always needing more capital to implement new projects while not taking into account the cash flow from sales to balance the due capital and interest payments.
As a result, many real estate companies are facing the risk of not having money to repay their debts when commercial banks limit credit and bond channels cannot raise further.
The proposal to loosen the credit room so that the Commercial Bank can provide credit for real estate companies to save real estate companies is just a temporary solution; With the current business model of real estate businesses, the more commercial banks give credit to real estate companies, the more capital intensive they will be and increase the risk of danger not only for debt companies but also for companies. for the whole commercial banking industry as it was in the period 2011 – 2012.
Facing the above situation, sustainable capital solutions for the real estate industry that need to be discussed may include:
The first, must have a sustainable business strategy; combine project development and cash flow management to avoid putting the company in a capital-intensive state, requiring large loans to cause risks. This is the most important solution to ensure healthy growth of the company.
Monday, must restructure finance to restructure commercial bank debts and bonds to have a safe financial structure. Accordingly, the company must sell some investment assets; find partners to invest in projects; or carry out M&A on projects that require large resources and long implementation time. In the restructuring plan, the company also needs new capital from the issuance of shares to increase its financial capacity.
These two solutions are not new; but are always 2 solutions used in difficult financial times of businesses and the economy. Which is especially important for real estate companies.
For successful restructuring and sustainable development, it is still mainly from the determination of the Board of Directors to implement. The sooner and more decisively the company implements, the more favorable it is to overcome difficulties and succeed. Companies that are passive, only looking for new capital from state policy, or try to borrow more without changing their business and investment strategies, the risk of bankruptcy is very high..