Total debt of 30 largest listed residential property developer surged by 20% to VND208 trillion (US$8.15 billion), with over half of the loans taken by Vinhomes and Novaland, according to VIS Rating.
Novaland, which saw its debt rising 6.5%, attributed the higher funding needs to construction of major projects in the southern localities of Binh Thuan, Dong Nai and Ho Chi Minh City, aiming to hand over 3,000 property units this year.
The company, which has been undergoing major leadership changes in recent years, has restructured most domestic loans to extend repayment terms and secured an additional VND18.2 trillion (US$713 million) in credit.
It is also negotiating the restructuring of foreign loans to delay payment from this year to the next two years.
“More projects with resolved legal issues provides a basis for banks to disburse more credit,” a Novaland representative told VnExpress.
Vinhomes, the country’s biggest property developer, saw its debt jumping 43% last year.
Its surge in long-term debt coincided with the launch of major projects such as Royal Island in the northern port city of Hai Phong and Global Gate in Hanoi.
The real estate arm of conglomerate Vingroup, despite acquiring more debt, saw its revenue and profit growing 13% last year.
“Increased borrowing by developers is not necessarily a negative sign,” said Nguyen Trong Dinh Tam, deputy director of investment strategy at Thien Viet Securities.
The need for more capital to fund projects with resolved legal issues indicates a gradual recovery in the real estate market, he said.
In Ho Chi Minh City alone, 34 projects had legal issues resolved last year.
Additionally, disbursements through bank loans and bond issuances reflect growing confidence among lenders following a real estate crisis, Tam added.
“Higher borrowing allows businesses to seize opportunities to expand their development.”
Repayment capacity remains the most critical factor when assessing developers’ leverage, and many listed firms show strong figures in their interest coverage ratio, which indicates that they are resourceful enough to cover their debts.
Economist Can Van Luc, at a recent forum, highlighted the positive trend of credit flowing into the real estate sector.
Around 18% of the funds went development, while only 6.5% was allocated to mortgage, he said.
In the bond market, developers issued approximately VND90 trillion in new bonds last year, accounting for nearly 20.4% of total issuance.
VIS Rating noted that real estate bond maturities in 2025 are the highest in three years but expects refinancing risks to be lower than in previous years due to improved access to domestic corporate bond markets.
The agency also highlighted improved credit appetite among banks, strong liquidity to support lending, and a positive market sentiment that could boost mergers and acquisitions and attract foreign investment, alongside new equity issuances.
Developers, therefore, are expected to post firm profit growth this year. Thien Viet Securities forecasts a 10-15% increase in post-tax profit this year.
