VIS Rating - an affiliate of Moody's presents our Credit Outlook for 2025 – Vietnam Real Estate Developers
☑️ In 2025, we expect the credit fundamentals for Vietnam real estate developers will continue on the recovery path from the downturn in recent years as market conditions turn more favorable to facilitate new project development and sales. New policies resolving legal roadblocks will spur project development in 2025, but will also impose higher land levies costs, burdening financially weak developers and leading to uneven recovery in cash flows across the sector.
☑️ Buoyed by robust homebuyer sentiment, developers’ sales and cash flow will improve in 2025. We expect developers will maintain good access to new financing, particularly through the domestic corporate bond market following the recent regulatory and legal reforms. Corporate bond defaults will decline as developers regain cash flow and the ability to service maturing debt.
☑️ In addition, financing conditions remain stably broadening in 2025, in which real estate bond issuance is expected to recover under the new legal framework, mitigating the sector’s peaking bond maturity of around VND 110 trillion in 2025.
Source: VIS Rating
“Weak cash flow is the key credit weakness of Vietnam developers, as around 70% of our covered developers have weak operating cash flow to cover debt repayments. We expect this metric will improve in 2025 as sales proceeds increase, led by large developers such as VHM, KDH, DXG, NLG, with robust sales pipelines in major cities.
Credit differentiation in the sector is likely to widen in 2025. Developers will face higher project development costs, leverage remains high, and those that had defaulted on their debt obligations will face more difficulties in refinancing to avoid future defaults,”– Duong Duc Hieu, CFA – Director – Senior Analyst, VIS Rating.
Source: Ministry of Construction (MOC), HNX, HOSE, UPCOM, State Bank of Vietnam (SBV), VIS Rating
“Despite increasing prices, 2025 property sales will be boosted by strong demand for investment and wealth accumulation among individuals. Significant advances in transport infrastructure and connectivity will support strong demand for housing projects in key cities.
On the contrary, we expect the hospitality segment to lag the sector recovery due to existing oversupply and lingering homebuyer caution,”– Le Viet Cuong – Associate Analyst, VIS Rating.
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