Novaland: How Vietnam’s Second Developer Ran Out of Cash

Novaland did not fail because its projects were bad; it failed because it bought a decade of land with two-year money. The company assembled resort and township sites on a scale second only to Vinhomes, financed them with a wall of domestic bonds and a dollar convertible, and then discovered that when the market for that paper closed, nothing else could replace it. This article traces the rise, the freeze of 2022 and 2023, the rescue mechanisms the state improvised, and what remains. It is part of the Vietnam Company Stories hub.

How did Novaland become Vietnam’s second-largest developer?

By moving earlier and further than rivals into large suburban and coastal land, and by paying for it with debt rather than equity. From a 2007 start in Ho Chi Minh City apartments, Novaland built a portfolio of more than 10,000 hectares across Đồng Nai, Bình Thuận and Bà Rịa-Vũng Tàu by 2021, mostly in three flagship sites.

The founder, Bùi Thành Nhơn, began in 1992 with Thành Nhơn, a trader in veterinary medicines and chemicals, and only formed Novaland in 2007. Its first decade was spent on mid- and high-rise apartments in Ho Chi Minh City, sold quickly to a middle class that was growing faster than supply. The company listed on the Ho Chi Minh Stock Exchange in December 2016, and Nhơn appeared on the Forbes billionaire list in 2021 with an estimated fortune close to $3 billion.

The strategic shift came around 2018, when urban land in the city became scarce and expensive and Novaland moved to the periphery. Aqua City in Biên Hòa, about 1,000 hectares along the Đồng Nai river, was positioned as a satellite town for the coming Long Thành airport. NovaWorld Phan Thiết, also around 1,000 hectares, and NovaWorld Hồ Tràm were resort towns aimed at domestic second-home buyers. Together they represented a bet that expressways and the airport would make coastal and suburban land worth several times its purchase price.

The bet was reasonable; the financing was not. Unlike Vinhomes, which had a deep-pocketed parent and a listing that raised over a billion dollars of equity, Novaland funded acquisition through bank loans and, above all, the domestic corporate bond market, which was booming from 2019 to 2021 under light regulation.

Why did the bond market matter so much to Novaland?

Because between 2019 and 2021 Vietnamese developers could issue two- and three-year bonds to retail investors through banks and securities firms at 10 to 12 percent with minimal disclosure, and Novaland used the channel more heavily than anyone. By late 2022 it had on the order of VND 44 trillion of bonds outstanding within total debt of roughly VND 65 trillion.

The domestic bond market grew from a niche to more than VND 1 quadrillion outstanding in three years, with property issuers taking the largest share. Bonds were sold at bank counters, often to depositors who did not distinguish them from savings, and the money was used to buy land, pay contractors and, in many cases, repay earlier bonds. Novaland was the sector’s largest and most visible issuer, and its paper traded on the assumption that the company could always roll it.

The company added an international layer. In 2021 it issued $300 million of dollar convertible bonds due 2026, arranged through Credit Suisse, to a group of foreign funds, with a conversion price well above the share price at the time. That instrument, together with loans from foreign lenders secured on project companies, gave Novaland a dollar liability just as the dong weakened and its shares began to fall.

The structure worked as long as new money arrived faster than old money left. Decree 65 in September 2022 tightened the rules on private bond placement, cutting issuance sharply. A month later the State Bank raised policy rates by 200 basis points in two steps to defend the currency, and the arrest of Trương Mỹ Lan, described in Vạn Thịnh Phát and SCB, made retail investors flee corporate bonds entirely. Novaland’s funding channel closed within a fortnight.

What happened when the cash ran out in late 2022?

The shares fell by the daily limit for seventeen consecutive sessions in November 2022, margin calls forced the founder’s family holding to sell stock, contractors stopped work at the flagship sites and Novaland began missing bond payments. The founder, who had stepped back in January, returned as chairman in February 2023 to negotiate directly with creditors.

The share collapse was self-reinforcing. NovaGroup, the family vehicle, had pledged NVL shares against loans, and as the price fell below thresholds, brokers sold the collateral, which pushed the price lower and triggered further sales. Between early November 2022 and February 2023 the stock lost roughly 80 percent of its value, and Nhơn dropped off the billionaire list. The company published an open letter asking for calm and for government intervention.

On the ground, the effect was silence. Contractors at Aqua City and NovaWorld Phan Thiết, unpaid for months, withdrew workers, and buyers who had paid progress instalments found that construction had stopped. Novaland told the market it was in talks with lenders and would prioritise completing units that could be handed over for cash. Some buyers accepted extensions; others organised and protested. In early 2023 the company acknowledged it could not meet several bond maturities and proposed extensions or settlement in property.

The government’s response began with a working group on real estate, established in November 2022 under the Ministry of Construction, which visited stalled projects and compiled lists of legal obstacles. That group became the channel through which Novaland’s zoning problems, which had been partly self-inflicted, were untangled over the following two years.

How did Decree 08 and the government task force keep Novaland alive?

Decree 08, issued in March 2023, allowed bond issuers to extend maturities by up to two years with holder consent and to settle in assets, which stopped a wave of technical defaults. In parallel, the task force pushed Đồng Nai and Bình Thuận to resolve zoning and land-fee disputes that had frozen Aqua City and NovaWorld Phan Thiết.

The decree changed the legal terms of the whole market. Before it, a missed bond payment was a default with immediate cross-default implications for bank loans; after it, an issuer could negotiate a two-year extension and, if holders agreed, hand over apartments, villas or land in lieu of cash. Novaland used every provision, rescheduling tens of trillions of dong of bonds through 2023 and 2024 and offering buyers and bondholders discounted units at its own projects.

Aqua City was the harder problem. The project’s detailed plans conflicted with Biên Hòa’s approved master zoning, which meant sales contracts could not be registered and banks could not lend against the site. Resolving that required the province to adjust its own master plan, a process that involved the Ministry of Construction, the Prime Minister’s office and several rounds of inspection. Only in 2024 and 2025 did the approvals arrive that allowed the project to resume handovers and the company to book revenue.

The international convertible was restructured separately. After long negotiations, holders agreed in late 2023 and 2024 to lower the conversion price substantially, to extend timelines and to accept that Novaland would repay in tranches as it recovered. The deal diluted existing shareholders but avoided a foreign default that would have complicated every other Vietnamese issuer’s access to offshore money.

Where does Novaland stand financially after the restructuring?

Alive but weak. The company reported a small profit in 2023, driven by restructuring gains and asset sales, then a net loss of several trillion dong in 2024, largely from a provision for retroactive land-use fees on the Lakeview City project, and its auditors have continued to flag material uncertainty about its ability to continue as a going concern.

The balance sheet is still dominated by inventory, mostly land and work in progress at the three flagship sites, against liabilities that remain on the order of VND 200 trillion. Bond maturities have been pushed into 2025 and 2026 rather than eliminated, and repayment depends on selling and handing over units at Aqua City and the NovaWorld resorts at a pace the market has not yet delivered. Each quarterly report has shown cash that is thin relative to obligations.

Revenue has been lumpy. Handovers at Aqua City resumed after the zoning approvals, and the company has recognised revenue in blocks as buildings complete, but the resort projects depend on a domestic second-home market that has been slow to return. Novaland has sold non-core assets, including hotel and office holdings in central Ho Chi Minh City, and NovaGroup has continued to reduce its stake to repay margin loans and support the listed company.

The land-fee provision illustrates a broader hazard. Vietnamese authorities have been recalculating land-use fees on projects approved years earlier, sometimes producing bills of trillions of dong that developers had not reserved for. The same retroactive risk hangs over other companies, and it is one reason the sector’s banks, discussed in Vietnam’s Bad-Debt Machine, have been reluctant to lend against approved-but-not-yet-fee-settled land.

Why did Vietnam avoid an Evergrande-style collapse?

Because the state intervened early with bond extensions and zoning fixes, because Vietnamese developers were less leveraged in aggregate than their Chinese peers, and because the largest player, Vinhomes, was solvent and kept building. The property sector shrank sharply in 2023 but did not take the banking system with it.

The China comparison was on every analyst’s screen in early 2023. Evergrande had liabilities above $300 billion, hundreds of projects across dozens of cities and a large offshore bond stack. Novaland’s liabilities were less than a tenth of that, concentrated in a few sites, and mostly owed to domestic holders whom the state could persuade to extend. The instrument that saved Vietnam was Decree 08, which had no equivalent in China’s initial response.

The banking system was also better placed. Property loans and bonds were a large share of Vietnamese bank assets, but the State Bank had capped credit growth through its quota system and pushed banks to raise capital in the preceding years. When the freeze came, bank losses on developers were absorbed through provisioning and restructuring rather than by failures. SCB, the one bank that did fail, was a fraud rather than a credit cycle casualty.

The cost was paid elsewhere. Home completions fell sharply in 2023, tens of thousands of buyers waited years for units, the bond market lost the trust of retail investors and has only partly rebuilt it, and several smaller developers quietly disappeared. Vietnam avoided a systemic crisis, but the sector that emerged is more concentrated, more dependent on the largest player and more cautious about anything the state has not explicitly approved.

What does the Novaland crisis teach founders, investors and lenders?

That funding tenor must match asset tenor, that concentrated bets require concentrated equity, and that in Vietnam legal completeness of a project is a financial variable, not a formality. A developer with clean titles and long money survived 2023; one with disputed zoning and short bonds did not.

For founders, the transferable lesson is about the order of operations. Novaland bought land first and secured approvals second, on the assumption that a fast-growing market would forgive delays. When the market stopped, unapproved land could not be sold, mortgaged or handed over. Companies that sequence approvals before scale, even at the cost of slower growth, hold assets that remain liquid in a downturn.

For investors, the lesson is to price the founder’s leverage as well as the company’s. NovaGroup’s pledged shares turned a liquidity problem into a share-price collapse and then into a control problem. Vietnamese company disclosures show pledges only partially; the prudent assumption is that a controlling family with rapid expansion has borrowed against its stake.

For lenders and bondholders, the Decree 08 experience is a warning about recovery. Extensions and payment in kind protected the system, but individual creditors received discounted villas in resorts that were not yet built, rather than cash. In a future cycle, the state may again prefer systemic stability to creditor rights, and pricing on Vietnamese developer paper should reflect that.

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