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Real estate projects left fallow, foreign investors vanished from sight   2012-07-08 - VietNamNet

A lot of foreign invested real estate projects have been unimplemented after they got operation licenses, while the investors have disappeared altogether.

ParkCity project has not been implemented

The foreign investment in real estate projects was once considered the guarantee that the projects will succeed. However, in fact, many of the foreign investors are not financially capable to develop the projects.

The projects imposing in big scale and famous in slow implementation

A lot of projects capitalized at hundreds of millions of dollars in Hanoi still have been left idle over the last many years, since they day they got licenses. In fact, the investors registered the projects just to “make a reservation,” while they cannot implement the projects because of the limited financial capability.

If the market conditions are good, they would sell the “apartments on paper” to make profit. Meanwhile, if the market falls down, the projects would be kept on “pending” status until the new opportunities come.

The ParkCity urban area project in Ha Dong district is a typical example. Advertised as “houses in the park,” the project was well known to every Hanoians. The investor of the project is VIDC, a joint venture between Singaporean Perdana ParkCity and Vinaconex Hoang Thanh. It was expected that the first and second phases of the project would be completed by 2014, while the whole urban area project would be completed after 10 years.

However, the imposing project can be seen only on the billboards, not in reality. The buildings have not been set up, while there is no sign showing that the buildings would arise in the near future, because there is no worker on the construction site.

The project was so famous that its villas and apartments were sold well like hot cakes. A lot of people, who could not buy apartments directly from the project developers, had to buy products from primary investors at the prices higher by 1.5-2 billion dong than the original prices.

The investor set up sky high prices for turn-key apartments. A villa was sold at 800,000 dollars, not including VAT. If counting on the tax and the price gap, every square meter of land here was priced at 3000 dollars, or 85 million dong.

However, investors have been trying to run away from the project. They now offer to sell the apartments at the losses of billions of dong.

The Mo Lao urban area in Ha Dong district is also in the same situation. Booyoung Vina, one of the 30 South Korean biggest real estate groups, received the “clean land” in 2007 already. However, to date, the place where the urban area should be arisen, remains a fallow land.

The foreign investor has affirmed that it is financially capable enough to implement the project, attributing the slow implementation to the programming adjustment. The project investment license has been adjusted for five times, while no one can say for sure when the project would be implemented.

The bitter truth of foreign invested projects

The report of the Hanoi People’s Committee to the Ministry of Construction showed that 95 real estate projects registered by foreign investors have been granted licenses so far, which have the total investment capital of hundreds of millions of dollars. However, very few projects have been implemented as previously planned, while most of the others have been going very slowly.

Deputy Minister of Construction Nguyen Tran Nam said that it’s now the time to review the foreign investment in the real estate sector.

Nam said that a lot of investors registered mammoth projects capitalized at several billions of dollars. However, their investment capital in Vietnam is modest, just accounting for 20-30 percent of the total projects. The remaining capital needed for the projects are mobilized by the investors in Vietnam, from Vietnamese sources.

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