VIETNAMESE REAL ESTATE COMPANIES SHIFT TO DEFENSIVE STRATEGIES TO PRESERVE CASH FLOW

Declining Transactions Put Pressure on Operating Cash Flow

Real estate brokerage firms are among the businesses feeling the slowdown in demand most clearly.

Do Hung Dung, Sales Director of a brokerage firm in eastern Ho Chi Minh City, said the company’s transaction volume had fallen by around 70–80% in recent months compared with the same period last year. At certain points, the firm recorded no completed transactions despite increasing its advertising budget and expanding customer acquisition channels.

The slowdown has also affected plans to distribute new projects toward the end of the year. When the number of early registrations falls short of expectations, developers are increasingly inclined to postpone or adjust their launch schedules.

Meanwhile, brokerage firms still have to cover recurring expenses such as office rent, employee salaries, marketing, and operating costs. Delays in receiving commissions from previous transactions can further tighten short-term cash flow.

If market conditions do not improve, some firms may have little choice but to streamline their organizations and reduce non-essential expenses to maintain operations.

Developers Prioritize Capital Recovery Over Expansion

Cash-flow pressure is also prompting property developers to reconsider their investment strategies.

An executive at a real estate company in Ben Thanh Ward said the company had postponed the implementation of several new projects and was instead concentrating resources on projects already under construction. The objective is to complete these developments and hand over units to customers as soon as possible, allowing capital to be recovered sooner.

With absorption rates remaining below expectations, continuing to allocate capital to land banks that cannot yet generate sales could further increase financial pressure, particularly for companies relying on bank financing.

As a result, preserving cash and shortening the capital recovery cycle have become higher priorities than expanding development activities.

Some companies are also considering joint development arrangements or transferring part of their projects to partners. While sharing future profits may reduce potential returns, such strategies can lower upfront capital requirements and reduce financing costs when sales take longer than expected.

Financial Weaknesses Are Becoming More Visible

The pressure on cash flow is emerging alongside a growing number of real estate businesses leaving the market.

According to the Statistics Office under the Ministry of Finance, 1,463 real estate companies nationwide completed dissolution procedures during the first six months of the year, more than double the figure recorded in the same period last year. This translates to an average of approximately 243 companies exiting the market each month.

On the demand side, typical mortgage rates of around 12–16% per year are also making homebuyers more cautious. High property prices, combined with uncertain investment returns, have encouraged buyers to delay purchasing decisions, further weakening market liquidity.

According to the Ministry of Construction, the number of successful real estate transactions nationwide fell by 36% year on year. Data from Dat Xanh Services also showed that market absorption during the first half of the year declined by 62% compared with the second half of 2025, bringing the average absorption rate down to around 20–30%.

Developers Face a Difficult Balance Between Stimulating Demand and Protecting Margins

To support sales, developers have increasingly relied on incentives such as interest-rate subsidies, extended payment schedules, and other promotional policies.

However, these measures are not equally sustainable for all companies.

For financially weaker developers, offering larger incentives can further narrow profit margins and place additional pressure on cash flow. On the other hand, reducing incentives could slow sales even further, extending the time required to recover invested capital.

Developers therefore face a delicate balancing act: maintaining sufficient incentives to support sales while protecting the cash reserves needed to keep projects and businesses operating.

Highly Leveraged Companies Face Greater Pressure

Vo Hong Thang, Deputy General Director of DKRA Group, said weakening purchasing power is increasingly highlighting the differences in financial resilience among real estate companies.

For developers, slower transactions mean delayed revenue and cash inflows, while expenses related to land, construction, staffing, and interest payments continue to accumulate. Companies with high financial leverage are particularly vulnerable when sales cycles become longer.

According to Thang, some companies now have fewer options for managing financial pressure than in previous periods. A number of businesses have already sold assets or transferred projects to address financial difficulties accumulated over earlier years, leaving them with less financial room to maneuver.

At the same time, tighter credit conditions are making it more difficult to raise additional capital for new developments or projects already underway.

Credit Becomes More Selective as Companies Strengthen Their Financial Position

Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said rising interest rates, together with tighter controls on real estate lending by some banks, are adding to financial pressure on the sector.

In some cases, corporate borrowing costs have reportedly risen to around 19–20% per year, significantly increasing financial expenses.

According to Chau, the issue is not simply the overall level of interest rates but also how credit is allocated. If financing is restricted too broadly, even companies with viable projects and the ability to bring new products to market may face difficulties accessing capital.

VCBS likewise assessed that real estate companies are facing less favorable credit conditions this year. Although overall credit continues to expand, lending is being monitored more closely amid concerns over rising bad-debt risks.

Companies with weak financial foundations, high leverage, or projects with limited liquidity are expected to face greater refinancing pressure.

The Market Is Entering a Stronger Selection Phase

As financing becomes more expensive and credit is allocated more selectively, real estate companies are increasingly shifting away from aggressive expansion toward defensive strategies.

Instead of prioritizing land-bank expansion and simultaneously developing multiple projects, many businesses are focusing on cost control, completing projects capable of generating cash flow, shortening capital recovery periods, and postponing non-essential investments.

Companies with strong cash positions, low debt levels, and legally viable projects remain better positioned to wait for a market recovery or take advantage of opportunities created as competitors scale back their operations.

By contrast, businesses that rely heavily on debt financing and sales proceeds will face greater pressure if market liquidity remains weak.

With capital becoming more expensive and credit increasingly differentiated according to financial strength and project quality, the real estate market could enter a more pronounced consolidation and selection phase. For companies with limited financial resources, strategic partnerships, project transfers, or a reduction in operating scale may become necessary options for preserving liquidity and maintaining business continuity.