The average interest rate on real estate bonds last year was 9.76 percent but this has climbed to 13.16 percent as real estate firms struggle to raise capital, according to Tuoi Tre is reporting. Quang Khanh Tran, the general director of Viet An Hoa Real Estate Investment, told the publication that real estate profit margins were normally around 30 percent, however, he also notes that these are not normal circumstances and says at the moment profit margins of 10 to 20 percent are even a challenge.
For context: Over the last year or so the real estate sector has struggled after a number of high-profile arrests over the misuse of funds raised through bonds. This has also impacted sentiment toward corporate bonds–hence the higher interest rates. However, it’s not clear that the real estate sector’s woes are anywhere near over, a case in point being the higher interest rates reflecting higher perceived risks.