VietNamNet Bridge - Many real estate projects located in prime locations in HCM City, which were previously considered symbols of the city’s progress, have been abandoned for years, causing great waste.

The half-done M&C Tower.

The most typical example is the $256 million M&C Tower, an office building combined with luxury apartments situated in a prime location in HCM City’s center, facing the three roads of Ham Nghi, Ton Duc Thang and Vo Van Kiet. The investor of this project is the Saigon M&C Real Estate JSC, in cooperation with Saigontourist, M&C JSC, East Asia Bank and the East Asia Securities Company Limited.

Launched in 2009 and scheduled for completion in 2011, M&C Tower was expected to supply the market with hundreds of luxury apartments. Until now, the 42-storey building has not been completed. Hundreds of million of USD are stuck in this project, causing huge waste and problems for investors.

Mr. Dao Anh Dat , chairman of the Trade Union of the Saigon M&C Real Estate JSC, said that since this project was abandoned, many workers have become jobless. The investor now owes wages and social insurance premiums worth nearly VND10 billion (hundreds of thousands of USD).

Many people who paid in advance to purchase apartments of this project, at the price of nearly $8,000/m2, are at risk of losing money.

At this moment, the investor has invested about VND4 trillion (nearly $200 million) in this building, with about 80 percent of the workload completed. To finish this project, the investor needs over VND1 trillion ($50 million). In case they cannot find financial resources to continue this project, it will be hard for them to sell this VND6 trillion project.

Another example is Thuan Kieu Plaza building on Hong Bang Street, District 5.

The project was completed in 1998 after four years of construction with 33 floors and a total area of 100,000 m2. The investors are the Saigon Real Estate Corporation Limited in cooperation with Kings Harmony Intl LTD (Hong Kong), in which the Vietnamese partner contributed 25% of the capital.

Thuan Kieu Plaza used to be a symbol of Ho Chi Minh City as a big business center and apartment building. However, with big mistakes in architectural design, this work soon became deserted.

Architect Luu Trong Hai, former Head of Architecture Management Division of the HCM City Construction Department, said that with a prime location at the gateway to Cho Lon, located in a densely populated and wealthy area, Thuan Kieu Plaza would have been a busy commercial center.

This project failed because the investors designed apartments in the form of residential architecture of Hong Kong, with each apartment being divided into many small rooms of only 2.7m high, with many nooks and walls, creating a stifling feeling.

Another reason is the high price of apartments, which stood at VND3-VND5 billion/apartment in the 2000s, the highest in HCM City at that time.

Reportedly, Thuan Kieu Plaza has been acquired by An Dong Investment JSC at VND600 billion (nearly $30 million). The new investor plans to break down the current building to build a new commercial center combined with apartment building.

The deal was welcomed because it will help change the look of District 5 and reduce the waste of prime "golden" land.

HCM City suffers from abandoned estate projects

Thuan Kieu Plaza

Not only investors of abandoned projects suffer but also the authorities of HCM City.

For example, the Thu Thiem New Urban Area in District 2 has been delayed for more than 10 years. The city has nearly completed site clearance.

To pay for land compensation, site clearance and resettlement, construction of technical and social infrastructure and interest for this project, HCM City spent over VND29 trillion ($1.3 billion), including VND12 trillion ($545 million) from the municipal budget, over VND4 trillion from other sources and VND12.97 trillion of loans.

HCM City Vice Chairman Nguyen Huu Tin said in a recent meeting that the city was under great pressure to repay the principal and interest in 2015-2016.

Specifically, in 2015 the city had to pay interest of over VND902 billion (over $45 million), due principal of VND5.2 trillion and interest of VND828 billion in 2016.

In addition, demand for investment in the Thu Thiem new urban area in the future is enormous.

In the current circumstances, it is difficult for the city to borrow more capital from bank for this project.

Yet, to date only several projects are under construction in the Thu Thiem new urban area (700 hectares).