DIC GROUP REACHED TOP 10 REAL ESTATE COMPANIES IN 2023

On April 7th, 2023, Vietnam Report Joint Stock Company (Vietnam Report JSC) officially announced the Top 10 Real Estate Companies in 2023.

This is the result of independent research by Vietnam Report, built on scientific and objective principles to recognize and honor the pillar enterprises of the real estate industry that have been making their best efforts to achieve many achievements in production and business activities, building brands, demonstrating solid bravery with stable financial capacity, good resilience in the context of the global economy full of fluctuations in the past year. Enterprises are filtered from the database of Vietnamese enterprises in Vietnam Report's ranking studies in the Real Estate industry with financial data updated to December 31st, 2022, combining the use of Media Coding method (encoding press data in the media) and surveying research subjects to give give the most objective and complete assessment about the business and other distinctive names.

List 1: Top 10 Real Estate Investors in 2023

List 2: Top 10 Industrial Real Estate Companies in 2023

Source: Vietnam Report, Top 10 Real Estate Companies in 2023, April 2023

The picture of the Real Estate industry in 2022: The beginning of the year is exciting, the end of the year is "immobile"

Stepping out of the COVID-19 pandemic, the real estate market in 2022 has had many opportunities to recover and develop: Right from the first quarter, a series of investors planned to launch many projects and real estate to the No. 2 position in attracting foreign direct investment (reaching nearly 600 million USD), the highest M&A value in 5 years (reaching nearly 1 billion USD)… The excitement of the market is not only from the supply side but also from the demand side. Interest in real estate products increased in most segments, especially land plots.

Since April 2022, the market has gradually calmed down with a decrease in purchasing power, first in the segment of rural land and land plots, then spreading to the mid-high-end apartment market in large urban areas. The segments of serviced apartments, offices for rent, villas, townhouses, resort real estate... all recorded a significant decline. This situation lasted until the end of 2022 due to a series of suppressive difficulties. The State has implemented policies to tighten industry credit towards the goal of sustainable growth and strengthen inspection and examination of violations and business activities of real estate enterprises. In addition, the fact that many business leaders are entangled in the labour cycle has caused insecurity for the whole market, causing many transactions to be delayed, and ongoing projects to stop abruptly. According to most experts, these difficulties are much heavier and more serious than the force majeure factor from the epidemic.

Although many market segments fall into bottlenecks, industrial real estate is still a bright spot when the occupancy rate of industrial parks is 85% or more. Due to strong demand from various sectors, the average occupancy rate of tier-1 markets in the North (including Hanoi, Hai Phong, Hai Duong, Hung Yen, Bac Ninh) reached 83.2% in the fourth quarter of 2022. The South also received positive news from the industrial real estate segment with an average occupancy rate of 90% for the market in Ho Chi Minh City, Dong Nai, Binh Duong, Long An. According to Vietnam Report's survey results, 28.6% of industrial real estate enterprises said their revenue and profit grew by over 15% compared to 2021. In the context of the whole industry facing difficulties, this is also a remarkable achievement of the group of industrial real estate enterprises.

With a picture of segmentation by time and by segment in 2022, the business situation of enterprises in the industry is also strongly differentiated. According to the General Statistics Office, by the end of 2022, the number of dissolved real estate businesses is more than during the COVID-19 outbreak with nearly 1,200 enterprises; Meanwhile, the number of enterprises dissolved in 2021 and 2020 was 861, 978 respectively. In the first quarter of 2023, 1,816 enterprises ceased business for a definite time and 341 enterprises dissolved.

The picture of the real estate industry over the past time has also been reflected authentically through the lens of the media. The results of media analysis on influential channels show that the real estate industry in the last months of 2022 had received the largest amount of negative information in the past 3 years. Only less than 10% of negative information was undercontrolled til the end of July, entering the following months with less positive developments in business results, a sharp increase in interest rates, difficulties in bond mobilization channel caused the capital flow to be congested, resulted in an enormous increase of negative information’s rate. Notably, there were times when the amount of negative news exceeded the amount of positive news (November 2022 and January 2023).

Figure 1: Positive and negative news developments about the real estate industry by month

Source: Media Coding data of real estate businesses from February 2020 to the end of January 2023, Vietnam Report

In terms of information quality, enterprises are rated as "safe" when reaching the ratio of positive and negative information difference compared to the total amount of encrypted information at 10%, but the "best" threshold is over 20%. According to research results from February 2022 to January 2023, 57.7% of enterprises reached the threshold of 10% and 42.3% reached the threshold of 20%; Meanwhile, this figure a year ago was 73.8% and 65.4%, respectively. It can be seen that the quality of information in phase decreased with business results when compared to the previous year.

Untying the cash flow bottleneck to break the liquidity ice: The survival story of the real estate industry in 2023

One of the characteristics of the real estate business is the need for large capital in the medium and long term. In the world, the main source of capital for the real estate market is investment funds and the stock market. Meanwhile in Vietnam, financial institutions have not been fully formed, so enterprises in the industry are still relying mainly on credit capital from banks and direct capital from people.

In the past 5 years, the sublimation of the stock market and the blooming of the corporate bond market have helped businesses gain more resources to carry out investment projects. However, the State's tightening criteria for project approval, correcting the bond market by strongly handling a number of organizations and individuals involved in corporate bond issuance – although assessed as necessary – has also created a great impact on the market and investor sentiment. In addition, in the past 3 years, the context of the business environment has had many great fluctuations, high inflation has caused central banks of countries and Vietnam to switch from easing policies to tightening monetary (reducing money supply, increasing interest rates) to control inflation, stabilizing the socio-economic environment. These factors make enterprises in the industry not only weak in financial capacity but also increasingly difficult to access capital sources in both stocks, bonds, bank credit, and foreign loans.

To cope with the cash flow shortage, 55.2% of businesses surveyed by Vietnam Report chose to borrow from commercial banks, rose 4.1% compared to the previous year. The proportion of businesses expected to tighten their belts and reduce operating costs increased the most (41.4%). The proportion of enterprises mobilizing from the bond channel dropped sharply from 24.4% to 1.1%.

Figure 2: Main solutions that businesses execute to deal with cash flow shortages

Source: Survey of real estate businesses from Vietnam Report, February 2022 and February 2023

On the other hand, the Government has taken measures to remove difficulties for businesses that do not have money to pay bond debt on time by issuing Decree 08/2023/ND-CP amending, supplementing and suspending the implementation of a number of articles in the Decrees regulating the offering and trading of individual corporate bonds in the domestic market and the offering for sale of corporate bonds in the international market. Decree 08/2023, Decree 153/2020 and Decree 65/2022 are considered as the Government's efforts to unleash bond capital flows for the real estate market throughout the past period.

Besides the support measures from the Government, businesses in the industry are also aware of the problem of having to make efforts to save themselves. The survey results of Vietnam Report indicate the top 6 driving forces for businesses to overcome difficulties and grow, including: (1) The company's business vision and strategy are clear and grasp market trends; (2) Their position and competitive potential in the industry; (3) A team of highly qualified, experienced and disciplined personnel; (4) High in foreign investment capital (FDI); (5) Receive aid from economic support packages of the Government (tax reduction, debt rescheduling, etc.); (6) Many legal difficulties and obstacles related to the real estate market have been focused on solving.

Figure 3: Motivations to overcome difficulties and create growth of real estate businesses in 2023

Source: Survey of real estate businesses from Vietnam Report, February 2023

Top 5 trends and priority strategies of real estate businesses

In the context of many outstanding difficulties such as congested capital, supply-demand asymmetry, overlapping legal issues, the impact of economic recession ..., the prospect of the real estate industry in the coming time cannot be really optimistic. However, with the support of the Government and the internal strength of businesses, the real estate market is still likely to change more positively.

According to Vietnam Report's research, the social housing segment tends to explode when people's demand increases and the project "Invest in building at least 1 million social housing apartments for low-income people and industrial park workers in the period of 2021-2030" has positive signals. The increase of millions of social housing units will solve the current housing market problem, which is "overabundant in the upper segment, lacking in the lower segment".

Another trend is "green living" is also taking the throne when safety and health gradually become one of the top concerns. In addition, digitization technology, new renters and investors switching to construction contractors are also forecast to be three prominent trends in the coming time.

Figure 4: Top 5 trends of the real estate industry

Source: Summary of expert interviews, business surveys and media analysis of the real estate industry - Vietnam Report, February 2023

In order to overcome difficulties and welcome new opportunities, real estate businesses consider that they need to prioritize 5 strategies: (1) Strengthening financial and risk management; (2) Cut costs; (3) Promote investment and technology application development; (4) Strengthening training and improving the quality of human resources to adapt to the digital age; (5) Restructuring and streamlining the personnel apparatus.

Figure 5: Top 5 priority solutions for business strategy of real estate enterprises

Source: Real Estate Enterprise Survey - Vietnam Report, February 2020, February 2021, February 2022 and February 2023

In the context of the current volatile world economy, 73.1% of businesses prioritize choosing strategies Strengthening financial management, risk management in order to improve operational efficiency, minimize the causes leading to revenue and profit decline, be proactive in the face of unexpected developments. Notably, the Cost Reduction strategy has increased year by year but is forecast to decline in the next 3 years, mainly because the market is gradually recovering from the consequences of the prolonged COVID-19 pandemic. Businesses are gradually shifting directions, prioritizing the development of digital transformation strategies, sustainable development strategies...

The difficulties of the real estate industry in the past period are both a test and an opportunity for businesses with stable financial strength and good resilience to "test by fire" to train themselves to become more stable and brave. These are enterprises that proactively and flexibly restructure, restructure investment, change business strategies, approach new technological standards and market trends to create a growth breakthrough in the new economic cycle, thereby affirming their position and reputation, deserve to be the pillars in the real estate industry.

(Source: Vietnamnet)