Real estate businesses and macroeconomic challenges

DNHN - The year 2024 marks a challenging period for real estate businesses, not only in Vietnam but also worldwide.

The volatility of macroeconomic factors and regulatory policies has deeply affected business operations, causing many companies to fall into difficult situations.

One of the most prominent macroeconomic factors affecting the real estate market is interest rates. In an effort to curb inflation and stabilize the economy, many countries, including Vietnam, have raised interest rates in recent years. This has made borrowing costs for real estate companies more expensive, making it difficult to expand or launch new projects.

In addition, banks have tightened credit for the real estate sector due to concerns about risks. This not only affects businesses by making it harder to access loans but also reduces consumers' ability to borrow to buy homes, leading to a decline in demand for houses, apartments, and other types of real estate.

The demand for real estate in 2024 has decreased significantly due to difficulties in accessing credit and higher mortgage interest rates. When buyers cannot easily access loans, the purchasing power in the market drops sharply. This has led to an oversupply, especially in the high-end segments, resulting in large inventories and directly affecting the revenues of companies.

Furthermore, many investors have shifted from real estate to other investment channels such as stocks, bonds, or gold to seek faster and safer profits amid the weakening real estate market.

Another factor contributing to difficulties for real estate businesses is the complexity of legal procedures and tightening regulations related to project development. Many real estate companies face challenges in completing the necessary procedures for construction permits and project implementation due to increasingly strict regulations on planning, environment, and legal requirements.

The government has also implemented stricter measures to control the real estate market to ensure transparency and sustainability. However, this has also posed obstacles for some businesses in adjusting their business strategies to adapt to policy changes.

The global economy has not fully recovered from the COVID-19 pandemic, along with political instability, energy issues, and the inflation crisis, which have significantly affected investment capital. Many foreign investors have also become more cautious when investing in Vietnam's real estate market and other countries, leading to a shortage of financial resources for large projects.

At the same time, the rising prices of construction materials such as steel, cement, and transportation costs have increased the investment capital for real estate projects. This not only reduces the profitability of businesses but also raises the selling prices of products, making sales more difficult.

Finally, the decline in income and financial capacity of the population also plays a major role in reducing purchasing power in the real estate market. When the economy faces difficulties, many consumers become more cautious in making major financial decisions, including buying homes or investing in real estate. This has caused a significant drop in demand, especially in the mid-range and high-end housing segments.

Macroeconomic factors such as interest rates, tightened credit, complex legal procedures, financial crises, and the decline in purchasing power have created a challenging business environment for real estate companies in 2024. To survive and thrive in this context, businesses need to quickly adjust their business strategies, seek flexible financial solutions, and find ways to optimize costs.

Additionally, real estate businesses should focus on potential market segments and respond accurately to consumer needs to overcome this difficult period.

Tran Tung