Many Foreign Investment Projects Waste on Land

According to a report submitted by the Hanoi People's Committee to the Ministry of Construction, the capital city of Hanoi now has 95 foreign-invested real estate projects licensed, valued hundreds of millions of US dollars. However, a very few projects are carried out on schedule while a vast majority of projects fall behind schedule.

 

The ParkCity urban area project in Ha Dong district has still left idle since its construction was commenced. Not long ago, ParkCity was known as a classy project on Le Trong Tan Road, Ha Dong district. The 77.45-hectare project is advertised as “houses in the park.” The investor is Vietnam International Urban Development Joint Stock Company (VIDC) - a joint venture between Singapore’s Perdana ParkCity (S) Pte and Vinaconex Hoang Thanh Urban Investment and Development Joint Stock Company. It is expected to be completed the first and second phases by 2014 while the whole urban area project will be completed after 10 years. Up to this point of time, inside the flashy beauty of billboards and well-cared flower pots are thickset grass bushes and gusty concrete pillars. Previously, the project caught the attention of investors. On the first day of opening offers, thousands of investors queued to seek the thin chance to pick up 50 apartments. A lot of people, who could not buy apartments directly from the developer, had to buy products from lucky ones at the prices higher by VND1.2-1.5 billion (apartment) and VND2 billion (villa) than the original prices. Then, the difference was pushed to VND3 - 5 billion. Unfortunately, the project slid to standstill, many domestic investors took bitter medicine because of a foreign-branded project.

 

Also in Ha Dong district, Booyoung Vina project in Mo Lao urban area is in the same situation. The construction site was handed in 2007 but the Booyoung Vina project is still left vacant. The US$171 million project was expected to be completed and put into use in 2010. Investor Booyoung Vina is one of 30 South Korean biggest real estate groups. The investor affirmed that it was financially capable to implement the project but planning adjustment is blamed for slowness. The project investment certificate has been adjusted for five times but it is uncertain that when the project will be completed.

 

Nonetheless, according to a FDI report released in August 2012 by the Foreign Investment Agency under the Ministry of Planning and Investment, the real estate sector ranked second in combined fresh and added investment capital of US$1.72 billion, accounting for 20.4 per cent of the country’s total.

 

Speaking at a conference on property investment, Construction Deputy Minister Nguyen Tran Nam said that it is now the time to review the foreign investment in the real estate sector. He said we should not accept projects with capitalised at US$3 - billion but their really spent capital in Vietnam is modest, just accounting for 20-30 per cent of the total value registered, mainly used for initial costs like site clearance and project establishment. The remaining capital needed for the projects is mobilised by the investors in Vietnam, from Vietnamese sources. They even sell their projects to others. This reality presses us to review this situation thoroughly to have suitable measures and policies.

 

Sharing Mr Nam’s views, Dr Phan Huu Thang, Director of the Foreign Investment Research Centre, said, the real estate will face numerous difficulties in the upcoming time but there are signs that FDI capital is being channelled into mergers and acquisitions (M&A). Some investors have reportedly sold their assets because of illiquidity. Old investors are suffering huge losses while likely investors are seeing a good chance to buy at real value. These factors will increase FDI capital flows in 2012.