The Bank for Investment and Development of Viet Nam (BIDV) plans to launch a credit package worth VND4 trillion (US$192.3 million) this month to help prop up the ailing real estate market, the bank's chairman Tran Bac Ha has told the media.

"The biggest difficulty for the property market now is weak demand, thus, we have drawn up this package to stimulate demand on the market," he said.

Ha said the bank would establish a linkage with investors, contractors and building material suppliers to implement the package.

Individuals or households buying a house at projects financed by the BIDV could borrow a money amount worth up to 85 per cent of the house's value with a borrowing term of up to 15 years. They would enjoy a preferential interest rate of 16 per cent a year.

They would also be assisted by the bank to approach investors to select suitable apartments in Ha Noi and HCM City, and given interior decoration special offers.

Investors, tenderers and material suppliers would be financed with amounts worth up to 90 per cent of their contract values within a year.

Ha said recent State Bank of Viet Nam's moves to reduce mobilising rates to 12 per cent per year and encourage lending in more property-related areas had made property firms feel more secure.

However, he said, a sluggish market now needed a strong remedy to survive and recover.

Dang Hoang Vu, director of the Thanh Binh property and trade company, said it was necessary that many banks join efforts at the same time, with similar support packages, to prop up the market.

"Enterprises and banks are on the same boat, we won't be able to exist if firms all fail," Ha told a recent meeting with the HCM City Real Estate Association, adding that banks were also fatigued with current economic conditions.

"No matter how many support policies there may be, the best way is that property firms must save themselves first," he said.

He suggested property investors be brave to restructure their companies, transfer projects that they could not continue and accept a shrink in profits to cut prices.

Sai Gon Gia Dinh Real Estate general director Nguyen Phung Thieu told Thoi bao Ngan hang (Banking Times) that market liquidity was hindered by property prices that were now too high for the majority of people.

Nguyen Van Duc, the deputy director of Dat Lanh Real Estate Company said firms should promptly apply new [construction] technologies so as to minimise costs, reduce prices and find buyers for their products.

HCM City Real Estate Association Chairman Le Hoang Chau reportedly said the property market would continue to see utmost difficulties this year, with its output depending heavily on puzzles related to capital, liquidity and unsalable apartments.

He said sky-rocketing lending rates, one of biggest challenges to firms last year, should be soon reduced to 14-16 per cent per year.

A roadmap to cut the rates down to 11-12 per cent was needed to bring the property market as well as the economy back to normal and stable development, he said.

Source: VNS