Investing in property shares is still a risky business

HA NOI (Homeid)— Property shares have always been a favourite choice with investors in recent years due to their high liquidity and good returns.

 

Investing in property shares nowadays is also risky as most property companies have reviewed their business targets

down for this year, due to high levels of unsold housing and high interest rates for borrowers.—Photo Vneconomy

 

However, how to pick a good share has now become more challenging, given the current economic difficulties some businesses are in.

After a series of dreary profit reports from most real estate companies this year, investing in property shares can actually bring in large profits.

According to a report by the VNDirect Securities Company, the share prices of most real estate firms saw a 10-50 per cent increase in the first six months of this year.

Cotec Invesment&Land-House Development (CLG) was the biggest winner, rising by 200 per cent while the Hoa Binh Construction and Real Estate (HBC), Kinh Bac City Development (KBC), Tan Tao Investment Industry (ITA) and Hoang Quan Consulting Trading Services (HQC,) all rose by around 40 per cent.

Not all the winners turned out profitable however. KBC posted losses of VND53 billion ($2.5 million) in the first quarter. CLG reported a tiny profit of only VND700 million ($33,300) during the same period, while others such as ITA or HQC had profits of just several billions of dong.

At the end of March, almost 40 per cent of listed real estate companies had reported a loss. Market insiders predict that the profits of these companies could also fall in the second quarter as many of the problems affecting the property market remain unresolved.

Although the Government approved a stimulus package of VND30 trillion ($1.43 billion) to kick start the real estate market, many analysts doubt the impact of this policy given the small amount of money compared to the market as a whole, as well as the lack of legal basis for the stimulus.

Investing in property shares nowadays is also risky as most property companies have reviewed their business targets down for this year, due to high levels of unsold housing and high interest rates for borrowers.

Some could even be forced to delist their shares due to cumulative losses such as the Dream House Investment Corp (DRH). This company incurred losses of more than VND27.6 billion ($1.3 million) over the past two years. In the first quarter of this year DRH posted a net profit of just VND300 million ($14,200). — VNS

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