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Property market in Vietnam slowing due to high rates and lack of lending

High interest rates are slowing down the residential property market in Vietnam as potential buyers find it difficult to get loans, it is claimed.


According to CapitaLand Limited, Southeast Asia’s biggest property developer, buyers cannot get bank financing as interest rates have soared to 22.42%, one of the highest in the region.

The central bank has increased its refinancing rate to 15% from 9% while lending costs for some businesses are up to 25%.

‘A lot of purchasers want to buy but they may not be able to borrow money. So the whole market has more or less slowed down,’ said Yip Hoong Mun, deputy chief executive officer of CapitaLand’s Vietnam unit.


The Singapore based company said last year it planned to increase its business in Vietnam from total assets of S$400 million to S$2 billion over three to five years.

Yip said other obstacles include higher than anticipated project financing costs, a slow development process, and currency devaluations. Measured at official exchange rates, the Vietnamese dong has lost about 7% of its value this year.

‘They do not have good control of fiscal and monetary policy. Inflation has the highest impact. It is a persistent problem for Vietnam, even though the general consensus is inflation will go down after this year,’ added Yip.

CapitaLand is still seeking investment opportunities in the country ‘because a lot of landowners or local developers may want to partner with foreign developers like us,’ Yip explained.

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