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Tan Hoang Minh Group withdraws from Thu Thiem land auction, accepts loss of deposit

Tan Hoang Minh Group has sent a letter to the Party, State and Government leaders, and HCM City People’s Committee about its decision to withdraw from Thu Thiem land purchase that it won at auction in mid-December.

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Tan Hoang Minh is the parent corporation of Ngoi Sao Viet, which won the bid to buy the 3-12 land area in Thu Thiem New Urban Area at the high price of VND24.5 trillion for 10,060 sq m (VND2.4 billion per sq m).

The second highest bidding price for the land plot was VND23.8 trillion, or VND700 billion lower, made by a foreign company.

The information was confirmed by Tan Hoang Minh’s representative on Jan 11.

According to Dung, after winning the bid, the corporation has had to change all investment, business and finance plans to make payment for the land in accordance with the provisions in the contract.

Tan Hoang Minh has designed a new investment and business plan that suits the new conditions to do business effectively, though the expected profit is low. The profit is ‘lower than the initial expectations’, but Tan Hoang Minh still believes it will be able to recover the investment capital.

“After winning the auction at such a high price, we heard different opinions from the public and found that such a high price may lead to serious consequences. Particularly, after we heard the comment of Minister of Finance at the National Assembly first extraordinary session, we thought about this and understood that the high price will affect the real estate market in particular and the national economy in general,” he wrote in the letter.

Dung said Tan Hoang Minh has decided to unilaterally terminate the contract on buying the 3-12 land plot in Thu Thiem urban area, and accept all sanctions for the termination.

 

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Prior to that, on December 10, 2021, HCM City successfully organized an auction to sell 4 land plots with the total area of over 30,000 sq m at VND37.350 trillion, or 7.09 times higher than the starting price, a record high price in the history of the real estate market.

The prices are even higher than the prices of land on Nguyen Hue or Dong Khoi streets considered the most expensive in HCM City, at VND1.8-2 billion per sq m.

Ngoi Sao Viet won the bid to buy the 3-12 land plot at VND24.5 trillion, or VND2.4 billion per sq m, or 8 times higher than the starting price.

Some days later, on December 21, Prime Minister Pham Minh Chinh sent a telegraph, requesting ministries, branches and localities to strictly punish the violations of the laws in land auction, and prevent exploitation of land auctions that cause market disturbances and seek illegal profits.

HCM City Taxation Agency has issued eight notices about the payment of land use fees and registration tax by four investors winning bids to buy land plots in Thu Thiem New Urban Area at the auction on December 10, 2021.

The agency asked Dream Public JSC, which won the bid to buy the 3-5 land plot, 6,446 sq m, to pay VND3.82 trillion for land use and VND500 million in registration tax for the land to be used for commercial purposes.

Sheen Mega, which won the bid to buy the 3-8 land plot, 8,568 sq m, has been requested to pay VND4 trillion in land use fees. It’s exempted from registration tax.

Binh Minh Investment and Trade, which won the bid to buy the 3-9 land plot, 5,000 square meters, has to pay VND5,026 trillion and VND500 million in registration tax.

Meanwhile, Ngoi Sao Viet has to pay VND24.5 trillion and VND500 million in registration tax.

As such, the total amount of money the four investors have to pay is VND37.364 trillion for the land and VND1.5 billion for registration tax.

Thirty days after the day the notice was released, investors must pay at least 50 percent of land use fee and registration tax. The remaining 50 percent must be paid within 90 days.

According to Lawyer Nguyen Huu Thoai from Hung Dong Law Firm, of the Hanoi Bar Association, this is only a letter from Tan Hoang Minh Chair Do Anh Dung and is not a document with legality about the termination of contract.

Under current laws on asset auctions, if the investors who win the bid to buy land don’t make payment for the land, this is understood that they refused the auction results. In this case, they will lose the deposits they made before attending the auction. The money will be remitted to the state budget.

On December 17, one week after the successful auction, four winners at the auctions signed contracts on purchasing land. The signing was implemented by three parties, including the auction winners, HCM City Land Bank Development Center, the representative of land owners and HCM City Property Auction Center.

The starting price of the land plot, in accordance with the legal document released in June 2021 by HCM City People’s Committee was VND2.942 trillion. The deposit must be equal to 20 percent of the starting price. As such, Tan Hoang Minh had to pay VND588.5 billion before attending the auction. If it doesn’t buy the land plot, it will lose the amount of money.

According to the HCM City Real Estate Association (HOREA), there are ‘loopholes’ in the auction of four land lots in Thu Thiem which may negatively impact the local real estate sector and the economy. 

Thuan Phong

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