Asset market quiet ‘cause there aren’t good-priced items

Asset market quiet ‘cause there aren’t good-priced items

Though the assets offered for sale are plentiful, only few deals have been made.

The Saigon Asset Management (SAM) in 2011 planned to join forces with Vietibank to set up an investment fund with the capital of $150 million which would be used to buy the assets put on sale in the market. However, the plan has not come smoothly as expected.

Louis Nguyen, SAM’s Managing Director, said there are many reasons behind this, but the most important one is the underdeveloped asset market in Vietnam.

He noted that while the assets of these kinds have seen the prices drop by 80-90 percent in the world, the prices have decreased just a little in Vietnam.

“The real estate prices have decreased by 10-30 percent only over the last year,” he said.

Dr. Tran Vinh Du, Director of TNK Capital Partners, a consultancy firm, also noted that though the demand is high, i.e. a lot of investors are seeking to buy assets, very few transactions have been made.

TNK now has some clients who are the investment funds seeking to buy immovable properties and other kinds of assets. However, Du admitted that it is very difficult to find the assets with good prices for now.

When the US real estate market fell into the crisis in 2009-2010, properties of different kinds were put on sale and deals were made very quickly through auctions, according to Du.

However, this method is not applied on a large scale in Vietnam. Most of the Vietnamese sellers try to look for buyers themselves, while only a few of them use consultancy service.

Also according to Du, buyers nowadays mostly eye businesses’ immovable properties because of the high recovery potentials and the more simple procedures. However, the problem is that most of the assets have been mortgaged by the businesses at banks for loans.

“If commercial banks accept to sell the mortgaged assets at low prices, this means that the sellers accept loss. However, it is obvious that banks do not intend to do that,” Du noted.

The Vietnamese asset market now is believed to be more attractive than ever as a series of state owned enterprises (SOEs) plan to sell their assets as requested by the State to withdraw the investments in non-core business fields.

However, Du said investors don’t have a lot of opportunities to buy the assets. In many cases, the sellers set sky-high selling prices. In other cases, the assets do not deserve buying at any price.

Tens of businesses announced the sale of their assets in their restructure plans in late 2013. However, they still demanded high prices, though they were in big financial problems and they really needed to sell the assets for money.

Huu Lien A Chau Company, for example, though incurring the loss of VND236 billion in 2013 and having the short term debts nearly equal to short term assets, did not accept to sell assets in Huu Lien and Minh Huu Lien, its subsidiaries, at low prices.

Huu Lien A Chau now holds 100 percent of stakes of Huu Lien (steel manufacturer) and 30 percent of stakes of Minh Huu Lien (interior goods), totaling VND114 billion.

vietnamnet