The advancement in quality of real estate valuation in saigon – hanoi commercial joint stock bank

BANKING ACADEMY ADVANCED PROGRAM  GRADUATION THESIS TITLE: THE ADVANCEMENT IN QUALITY OF REAL ESTATE VALUATION IN SAIGON – HANOI COMMERCIAL JOINT STOCK BANK (LOCATED IN HANG TRONG BRANCH) Student: Bui Huong Giang Major: Finance Class: K21CLCB Student ID: 21A4050103 Instructor: Assoc Prof PhD Mai Thanh Que Ha Noi, 2022 i Tai ngay!!! Ban co the xoa dong chu nay!!! 17014129066551000000 ASSURANCE I assure that this graduation thesis which is titled “The advancement in quality of real estate valuation in Saigon – Hanoi Commercial Joint Stock Bank” is my research, based on my knowledge I have gained in school, and the process of the internship at the Collateral Valuation Department, and more importantly is the instruction of Assoc Prof PhD Mai Thanh Que The basic theories written in this research was cited from specialized documents, regulatory documents of the Ministry of Finance and SHB The contents about the reality of the bank are factual and truthful, provided by the Collateral Valuation Department Once again, I affirm the truthfulness of the pledge Hanoi, May 9, 2022 Bui Huong Giang i ACKNOWLEDEMENT I want to express my deep sense of gratitude to my instructor – Assoc Prof PhD Mai Thanh Que, due to his detailed guidance and encouragement, which have contributed immensely to the evolution of the research Secondly, I am grateful for all the teachers of the Ministry of Finance, who have led me with the knowledge, so I can have the foundation to this graduation thesis This will be helpful for my upcoming career path Besides, I also take this opportunity to thank all the employees of the Collateral Valuation Department of SHB to support me during the internship and provide data for me to serve my research process Lastly, I want to say thank you for every survey respondents, so I can have data to analyze and research Thank you very much! ii Contents ASSURANCE i ACKNOWLEDEMENT ii LIST OF TABLES v LIST OF FIRGUES vi LITERATURE REVIEW CHAPTER 1: OVERVIEW 1.1 Basic theories 1.1.1 Real estate 1.1.1.1 1.1.2 Definition Valuation 1.1.2.1 Definition 1.1.2.2 Principles 1.1.2.3 Process 1.1.2.4 Methods 13 1.2 Factors affecting the quality of valuation 14 CHAPTER II: INTRODUCTION OF SHB AND VALUATION ACTIVITY 17 2.1 Overview of SHB 17 2.2 Valuation activity of SHB 18 2.2.1 Legal basis 18 2.2.2 Process of valution in SHB 19 2.2.3 Methods applied at SHB 22 2.3 Practical example 32 Research methods 39 3.1 Data used 39 3.2 Qualitative method (questionnaire) 40 3.3 Quantitative method 43 CHAPTER III: RESEARCH RESULT 47 CHAPTER IV: SOLUTIONS AND RECOMMENDATIONS 48 iii Oriented development 48 Solutions to improve the appraisal activity in SHB 49 Some recommendations about the real estate appraisal in SHB 52 REFERENCE 54 Appendix 1: Time frame of using assets (Houses, structures) 55 Appendix 2: Questionaire 56 Appendix 3: Table of consulting services fees on real estate, collaterals 57 Appendix 4: Sample of collateral valuation request form 59 Appendix 5: Sample of Plan and Survey of the current status of appraisal asset 61 iv LIST OF TABLES Table Page Table 1: Comparison between appraised asset and compared asset 23 Table 2: Adjustment for the absolute amount 23 - 24 Table 3: Adjustment by percentage rate 24 – 26 Table 4: Assess market price downtrend and liquidity time 26 27 – 28 Table 5: Regulations of construction price Table 6: Total invesment of the project 29 Table 7: Value determination of land use rights 29 Table 8: Total growth revenue 30 30 – 32 Table 9: Total construction investment Table 10: Land ownership value determination 32 Table 11: Individual customer’s evaluation of real estate appraisal 41 service of Saigon – Hanoi Commercial Joint Stock Bank on a scale of to Table 12: Corporate customer’s evaluation of real estate appraisal 42 service of Saigon – Hanoi Commercial Joint Stock Bank on a scale of to Table 13: Employees from business divisions’s evaluation of real estate 42 – 43 appraisal service of Saigon – Hanoi Commercial Joint Stock Bank on a scale of to Table 14: The amount of real estate collateral and its value at SHB in 45 the period of 2019 – 2021 Table 15: The proportion of actual real estate applications received at 46 the collateral valuation department in the 3-year period Table 16: Deviation rate after real estate revaluation v 46 LIST OF FIRGUES Firgues Page Figure 1: The structure of the branch 18 Figure 2: The proportion of survey respondents 41 Firgue 3: The amount of supply and transaction volume throughout 43 4-year period vi LITERATURE REVIEW The necessity of the research The Vietnamese economic is on the recovering progress after the Covid-19 pandemic Therefore, the number of business companies and individuals with the need to borrow capital to expand production and investment increases, which means the amount of appraised assets also rises Especially real estate, which is a type of broad and popular field, is considered the center of economic activities in the economy In addition, currently there are not many in-depth studies on this field The field of valuation is still quite new in Vietnam, and has not received much attention from the competent authorities Overall of the research The quality of real estate valuation is claimed to be important because its result should be shown quickly and correctly to ensure the benefits for both customer and bank Appraisal is a new profession in Vietnam, so at the same time does exist many challenges This research is vital for a clearer awareness about this field, which could contribute to the process of improving the appraisal quality, towards a more professional appraisal environment at SHB Research purposes The reason why I chose this research is the desire to further learn about the real estate market as well as the appraisal job Throughout the internship and research, I found out that the valuation process has not only achievements but also some issues, so some suggestions and solutions are offered to the process of perfecting the appraisal work of Vietnam in general and SHB in particular Objects and the scope of the research The research objects are the employees working in the Collateral Valuation Department located in Hang Trong Branch, the specialists of individual customers, specialists of corporate customers, and the customers who have been using appraisal services at SHB Methods used in the research In this thesis, I used methods to the research, which are collecting, synthesizing, analyzing, and evaluating For the collecting method, I collected the necessary data to use in the thesis, such as the total number of appraised real estate, re-appraisal rate, re-appraisal number of documents, etc For the synthesizing method, I synthesized the data collected and illustrate the result in tables or firgures For the analyzing method, I pointed out the fluctuations or the changes of the data For the evaluating method, I realized the changes then I assess it to be optimistic or negative, so the solutions and recommendations can fit the situation The structure of the research My research includes chapters with the below main content: Chapter 1: Overview about the real estate appraisal activity Chapter 2: Research of SHB, and its appraisal activity Chapter 3: Research result Chapter 4: Solutions and suggestions to complete the quality of real estate valuation Due to the limited scope of the study, it still has many shortcomings I really hope that I can receive suggestions from teachers so that I can improve this topic better Thank you, Assoc Prof PhD Mai Thanh Que, for giving me the best advice and conditions to perfect my thesis Thank you very much! CHAPTER 1: OVERVIEW 1.1 Basic theories 1.1.1 Real estate 1.1.1.1 Definition Pursuant to the Article 181 of the Civil Code of the Socialist Republic of Vietnam in 2005, real estate is an unmovable asset, including: lands, houses, construction associated with lands, and other assets prescribed by the law 1.1.1.2 - Characteristics Immobility: Real estate is one of special goods: apart from being sold, used, or transfered, they remains unchanged geographically - Heterogeneity: relying on different time and position does the price of real estate change In addition, there is also adjustment of customer taste, following the trend of the market - Scarcity: the population is rocketing, which leads to an increase in land use demand; however, land area is limited According to General Statistic Office, the total acreage of land in Vietnam is 329.414,5 km2, and the population density is 252 person/km2 - Stability: real estate involves land and built-in properties, and they all participate in reproducing society Eventhough being exploited in any case, they keep bringing about benefits for owners Moreover, owners are received fully the right of owning land and other benefits, and the time using is infinitive, so real estate has stability 1.1.2 Valuation 1.1.2.1 Definition In accordance with the Article 4, Clause 15 of the Law on Price number 11/2012/QH13, valuation is the responsibility of a company or organization which have the ability to value the properties in cash unit pursuant to the regulations of Civil