Vietnam’s Novaland, the country’s second biggest real estate developer, is currently being investigated by the Ho Chi Minh City Police department. The department has reportedly request documents pertaining to Aqua City, a real estate development in southern Vietnam’s Dong Nai province. As a result, Novalands share value plummeted by about 28 percent between April 8 and May 10.
This latest development adds to Novalands woes which have been many of late.
The company has spent the better part of the year negotiating with bond holders after defaulting on repayments at the start of 2023. As of January, it was still working on clearing US$300 million of outstanding international bond repayments.
Furthermore, it booked a first quarter loss of VND 601 billion or US$23.7 million. Although its worth remembering that Novaland reported an after tax profit on its unaudited financials statements in 2023 of VND 685 billion or US$27 million, however, after being audited it was actually found to only be VND 486 billion or about US$19.2 million.
All of that said, Novaland is not the only real estate firm findining the current real estate market challenging.
Vietnam’s real estate industry has been struggling for the last two years in the wake of the Evergrande crisis in China in 2022. This led Vietnam to take a long hard look at its own real estate industry in which it found the prevalent misuse of investor funds, particularly those acquired through the bond market, and that a number of real estate firms were grossly over-leveraged. These revelations then went on to spook investors and consequently, at the beginning of 2023, it had become very challenging for real estate firms to access capital.
See also: Vietnam’s Real Estate Market Recovery 2024: Unpacked