VietNamNet Bridge - With a price of $800 million, Keangnam Landmark 72, a 72-storey building in Hanoi has not attracted either local or foreign investors, analysts say.

The high-rise building was valued at 830 billion won, or $770 million, by the South Korean court, according to Hankyung, a South Korean newspaper.

The information about the sale of the building first appeared in South Korean newspapers in late April, when a series of Keangnam Enterprises’ scandals were discovered and the group’s president committed suicide. 

Some investors have expressed their interest in the deal, including big names such as Goldman Sachs and Qatar Investment Authority (QIA).

Keangnam was reported to invest 1.2 trillion won, or over one billion dollars, to build the building with the total use area of 610,000 square meters, of which 530 billion was borrowed from banks.

According to KBS Television, the project was believed to be a success with the apartment selling price sometimes reaching 3 million won (VND58 million) per square meter. The apartment blocks of the building are 70 percent occupied.

However, experts said the high borrowing proportion was the biggest problem of the project because this led to financial imbalance.

A real estate expert said he could not understand why such a high price is set by a South Korean court.

In principle, he said, there are three criteria to consider when valuing real estate. First, the total investment capital. Second, the prospect of the project development and the expected profit. Third, prices of other real estate transactions around the world.

The expert said that the Keangnam Landmark 72’s appeal lies in the offices for lease and high-end service apartments. 

However, the market segment has not recovered yet, and there is still an oversupply

Keangnam’s complex includes two 48-storey apartment blocks with 922 apartments and a 72-storey complex with an entertainment center, offices and hotel. 

The A-class offices cover the 12th-46th floors, while there are high-end service apartments for lease from the 48th to 60th floors. Intercontinental Hotel covers the 62nd -70th floor.

“All the apartments in the 48-storey blocks have been sold. This will be considered thoroughly by any investors who intend to buy Keangnam, because this will affect their capital recovery,” the expert said.

“I cannot see Keangnam complex being highly attractive once all the apartments have been sold,” he added.

Phan Xuan Can, chair of Sohovietnam, a real estate consultancy service provider, noted that buying existing operational projects through merger and acquisition (M&A) deals is the choice of many investors.

As for Keangnam complex, the investors can expect revenue from leasing and business activities.

Phuoc Ha