Why Are Many Real Estate Projects In Ho Chi Minh City Stagnant?
Stalled real estate projects are something that nobody wants to be involved in, considering both the perspectives of developers and homebuyers.
Why are many real estate projects in Ho Chi Minh City experiencing delays in progress?
The majority of the reasons behind the delays in many real estate projects in Ho Chi Minh City stem from obstacles related to land use and construction permits. Currently, Ho Chi Minh City has several projects experiencing delays due to these two main factors, including:
- The Metropole Thu Thiem – Son Kim Land
- Grand Manhattan – Novaland
- De La Sol – CapitaLand
- Celadon City – Gamuda Land
- Tan Thuan Dong Ward Project, District 7 – Gotec Vietnam
- Thien Ly Residential Area – An Thien Ly
- The Water Bay – Novaland
Projects with delayed progress in Ho Chi Minh City
Specific reasons for the delay in each project and the proposed solutions
- The Metropole Thu Thiem – Son Kim Land:
In 2019, the Government Inspectors concluded that this project was assigned to the developer by the Ho Chi Minh City People’s Committee without conducting a land-use rights auction, assessment, and land-use fee collection.
Proposed solution: The project is currently under review to determine and reassess the land price for retroactive land-use fee collection, aiming to avoid financial losses for the state budget.
- Grand Manhattan – Novaland:
Grand Manhattan has reached the construction progress up to the 28th floor but encountered obstacles related to financial obligations regarding land-use rights.
Proposed solution: Review and retroactively collect the outstanding fees to avoid financial losses for the state budget.
- De La Sol – CapitaLand:
Previously known as Cuu Long Apartment, De La Sol is located at 1 Ton That Thuyet Street, Ward 1, District 4. According to the urban planning, the project was initially invested by Saigon Cuu Long Production and Business Investment Corporation with 870 apartments.
In August 2017, Saigon Cuu Long transferred the project to Viet Hung Phu Real Estate Investment Business Joint Stock Company. CapitaLand later acquired 100% of Viet Hung Phu’s shares and renamed the project to De La Sol. The project is currently under review to identify any issues, particularly related to the previous enterprise equitization process.
Proposed solution: Conduct a thorough review regarding the enterprise equitization process.
- Celadon City – Gamuda Land:
Celadon City, formerly known as Tan Thang Sports and Residential Complex, is located in Tan Phu District. Initially, the project covered an area of over 90.08 hectares and was invested by Sacomreal. Later, the project was transferred to Saigon Thuong Tin Tan Thang Real Estate Investment Joint Stock Company, with Gamuda Land as the developer.
Regarding the project transfer and tax obligations, the Government Inspectors has proposed that the Ho Chi Minh City People’s Committee recover an amount of 514 billion VND, as it was considered improper to deduct this amount from the land-use fees. Tax-related issues have caused obstacles for the project.
Proposed solution: Recover the amount of 514 billion VND in unpaid taxes.
- Tan Thuan Dong Ward, District 7 Project – Gotec Vietnam:
Located at 10 Ben Nghe Street, Tan Thuan Dong Ward, District 7, the commercial center and luxury apartment project is developed by Gotec Vietnam Co., Ltd. with a scale of over 10,000 square meters. As of the survey on February 21, the project has completed its foundation and basement.
Since June 2022, the company has submitted three applications requesting the issuance of a notice of eligibility for sale or lease of commercial residential units, but the Department of Construction of Ho Chi Minh City has returned the applications, citing the need to review the transfer of land use purpose.
Proposed solution: Clarify the administrative procedures and process, review the real estate project.
- Thien Ly Residential Area – An Thien Ly:
Thien Ly Residential Area, located in Phuoc Long B Ward, Thu Duc City, is invested by An Thien Ly Construction and Service Co., Ltd. The project covers an area of 17.4 hectares, including townhouses, garden villas, a commercial center, kindergarten, and a 15-story apartment building.
The project has been granted land allocation since June 2007, and the detailed planning at a 1/500 scale was approved in August 2009, but it has not been fully implemented yet.
Proposed solution: Resolve issues related to construction permits and ensure that the developer adheres to the construction schedule.
- The Water Bay – Novaland:
The Water Bay is located at 26 Mai Chi Tho Street, Binh Khanh Ward, Thu Duc City, with a scale of 30.2 hectares. It is invested by 21st Century International Development Co., Ltd.
After the project was transferred to Novaland, it was rebranded as The Water Bay.
Construction works, including foundation works, are currently suspended due to inspection and examination. The People’s Committee of Ho Chi Minh City approved the conversion of over 30 hectares of land owned by 21st Century International Development Co., Ltd., in the Tourism, Culture, and Entertainment Area of Binh Khanh Ward, to build approximately 4,000 resettlement apartments, and exchanged over 30 hectares of clean land out of the total 90.2 hectares in the Nam Rach Chiec Resettlement Area.
Subsequently, the city approved the conversion of this resettlement land for residential business investment.
According to the Government Inspectorate, Ho Chi Minh City did not conduct auctions as required and miscalculated land use fees by not aligning them with the land delivery schedule for the projects.
Proposed solution: Review, collect fees, and prevent losses to the state budget.
The above-mentioned projects are being reviewed by the People’s Committee of Ho Chi Minh City to resolve the existing issues.
Each company will receive a preliminary conclusion from the city.
There may be cases where the projects face challenges from departments and the Vice Chairman of the People’s Committee of Ho Chi Minh City will review them. However, there are also situations where legal issues of the projects must be submitted to the highest leadership of the city for guidance on how to handle them.
Realtique VietNam Real Estate