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Million-dollar ventures back in the mix
New financial sources and mergers in real estate are helping to revive a series of projects that have been suspended for many years.
After spending 13 years as an unfinished 23-storey concrete block, last week the Kenton Node luxury apartment in Ho Chi Minh City was given new life by Novaland.
Located in Nha Be district and previously funded by Tai Nguyen Trade Manufacturing and Construction, the complex will be renamed Grand Sentosa, according to a Novaland representative, after it was acquired from negotiation with the former investor. Novaland is committed to developing and putting Grand Sentosa into operation on schedule by 2024.
The project, previously initiated in 2002 at a value of $300 million, was expected to hand over units to buyers in 2011 but was postponed after capital dried up. In 2013, the investor returned deposits to 100 customers who had purchased units.
In 2017, the project was resumed through new loans from a range of banks and new facilities such as a hotel, trade centre, theatre, school, and more were added, but work stopped again soon afterwards.
Meanwhile, located on “golden land” at the intersection of Ton Duc Thang and Ham Nghi in District 1, the Saigon One Tower project has been frozen for over a decade, even though it sits 80 per cent completed. Now Viva Land, a newly-established real estate investor, has jumped in to revive the venture, This building was renamed to IFC One, Saigon.
This project was previously funded by Saigon M&C Real Estate JSC with a total initial investment capital of $256 million. Construction started in 2007 and was expected to be completed after two years.
Meanwhile, the billion-dollar Saigon Binh An project located in Thu Duc city was resumed after Masterise Homes took over as developer. The project is being renamed The Global City. The initial plan was approved 20 years ago over 117 hectares and was being funded by Saigon Development and Investment Corporation.
According to Ben Gray, director of Capital Markets at Knight Frank Vietnam, the restarting of these projects sends a positive signal to the market, which can be quantified by looking at the stock market, where real estate group DXG is now trading at plus 5 per cent.
“This might suggest, for example, that investors expect to see a start to implementation of its project Gem Riverside, which has been on hold since 2018 as they have worked to resolve a number of legal challenges related to licence approvals. It is promising to note many projects restarting and also signals confidence in the market that rents or sales volumes are favourable for developers,” Gray told VIR.
The majority of major projects in real estate tend to be caused by legal challenges related to permitting or licensing, but financial constraints faced by some developers have also caused delays. The government is now supporting banks to allow them to transfer projects, meaning some projects can be re-implemented. There is also a strong appetite from buyers interested in development opportunities with some breathing life into stalled projects.
“Market performance is supporting and underpinning this with on-year increases in the value of the property that the projects contain, be it offices for lease or apartments and villas for sale, for example,” Gray added.
With regards to other projects that might be resumed, Gray stressed that while each project is different, some such as Lakeview City and Landmark 51 in Hanoi and Palm Heights in Ho Chi Minh City could come back online.
“Hopefully, we can soon see more development on famous golden land projects such as those on Nguyen Hue, Le Loi, and Hai Ba Trung in the heart of Ho Chi Minh City,” Gray said.
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