The other side of the property market in Vietnam
10-10-2013
 |
| The Dai Thanh apartment project in Hanoi - Photo: Thuy Ngan |
Numerous lawsuits have been filed against investors who failed to deliver apartments to buyers on schedule or fail to execute projects at all.
On the other side of the market, there are also developers who have managed to complete their project earlier or on schedule, but such developers are also sitting on fire as buyers refuse to fulfill payments and take over the properties. This situation sheds light on how the property market has ground to a halt.
Sued for quick execution
The images of customers surrounding property projects to object or suing project investors due to slow implementation are no longer strange. But that customers sue investors just because projects are implemented too fast is rare.
Such is the case that happens to Dai Thanh apartment project invested by Lai Chau Construction Company No. 1 in Hanoi.
According to an executive of Lai Chau Construction, to share difficulties with customers who have not owned houses, the company has tried to accelerate the progress of the project. Though many announcements of payments have been sent, customers do not make payments and some others even sue the company for working ahead of schedule.
In fact, the reason behind this paradoxical situation is that buyers cannot manage to make payments in accordance with the project’s progress.
Dai Thanh apartment project sparked a fever early last year although the market was in difficulty as its location is convenient and the developer offered a reasonable price of VND10-12 million per square meter for apartments of 38-70 square meters. With the current progress, apartments of the project will be handed over to customers one year ahead of the schedule instead of late next year as planned at first.
Meanwhile, customers of An Hung new urban area in Hanoi’s Ha Dong District invested by An Hung Urban Investment Joint Stock Company refuse to receive their houses.
The urban area has been constructed right on schedule since last year, but hundreds of villas and houses are empty with no residents. According to the investor, many of the customers are speculators and were stuck on the frozen market.
Late last year, FLC Group, investor of FLC Landmark Tower in Hanoi’s Tu Liem District, announced that it would sell out apartments of those customers who did not make payments and would even sue them after sending three payment notices.
Tran The Anh at FLC Group confirmed that FLC had finished construction.
“Therefore, we will persuade customers to receive apartments and pay the balance of 30% as committed. If customers do not come for the handover, we will sell out those apartments,” Anh said.
Similarly, only around 200 among 600 customers have received villas and adjoining houses in Lideco urban area invested by Tu Liem Urban Development Joint Stock Company in Hanoi’s Hoai Duc District although such properties had been ready since last year. “The total amount customers have not paid amounted to VND200 billion,” said Nguyen Van Kha, chairman of the company.
Struggling developers
Houses which are not received and paid for have caused huge trouble to project developers. For instance, the investor of Lideco urban area has had to pay interest sums totaling VND200 for over 400 customers who have not fulfilled their payment obligations over the past six years and this situation may be prolonged.
The investor of Geleximco new urban area, Hanoi General Export Import Joint Stock Company (Geleximco), has to incur a debt of up to VND200 billion as its customers do not make payments. Besides, hundreds of villas of the project have begun degrading as they are unused.
However, many enterprises still have to persuade customers or offer preferential interest rates.
“The market remains difficult and home buyers are also in difficulty, and thus we do not want to take strong measures forcing them to make payments,” said Vu Van Hau, deputy general director of Geleximco.
According to Pham Si Lien, vice chairman of the Vietnam Federation of Civil Engineering Association, that project developers accelerate the implementation progress and transfer houses early amid current difficulties of the market should be encouraged.
“However, it is not easy for customers with a real demand of accommodation to have enough money to pay as most of them are low- and medium-income earners. Meanwhile, for speculators, the frozen property market has pushed them to the corner, let alone the pressure of bank interests,” Lien said.
This situation is the consequence of the too rapid development of the property market in the past time, he added.
http://www.vir.com.vn/news/en/property/the-other-side-of-the-property-market.html
