Developers sit on hands amid dormant market

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Danang’s Investment and Planning Department has recently asked the city’s people’s committee to revoke licences issued to Korea-backed Kreves-Halla Joint Venture Company, Daewon Cantavil Limited Company and Vu Chau Long Real Estate if the developers fail to start luxury apartment projects before July.

Park Seeweong, business development director of Korean-backed Daewon Cantavil Limited Company - developer of the five-year delayed $30 million luxury apartment project in Hai Chau district’s Hoa Cuong Bac ward, said: “We still want to invest in the location. However, if we start construct now, there will be no customers.”

Seeweong said that the majority of local residents did not want to live in apartments except for low-income earners, who have insufficient money to purchase high-end apartments sold at over $1,100 per square metre.

“We have asked the municipal people’s committee to allow us to redesign the project to become a property project offering townhouses and villas for local residents,” said Seeweong.

However, negotiations faced difficulties as the 4.3 hectare site was planned for apartment buildingsonly.  

The joint venture between Halla and Kreves also gave the same reason for delaying the $200 million Jade Centre project in Hai Chau district’s Hoa Cuong Bac ward for two years.

Kim Young-Cheong, president of Korean-backed Kreves Vina, said: “We had paid $10 million in land rent for the project. We will never give up on the project. However, we are discussing with Halla to redesign the project to a lower class style.”  

The 8.8ha Jade Centre was initially designed to be 28-storey and 30-storey apartment blocks for 1,600 households, a  42-floor mixed-use building, a shopping centre and international school.

Vu Chau Long Real Estate launched units in its $24.2 million Danang Centre apartment project on Phan Chu Trinh street, immediately after the completion of project’s foundations in 2008. However, no work continued due to a dearth of customers.

The $180 million mixed-use complex Viendong Meridian designed with a five-star hotel, offices, apartments and a shopping centre,  has also been delayed for four years. Meanwhile, the sales of a series of luxury apartment projects such Blooming Tower and The Summit, are very low. 

According to a Savills report, apartments for sale in the city amount to 2,078 units from 11 projects, in which the primary supply is 1,061 units from 10 active projects and the secondary is 1,017 units.

The report also showed that only 80 apartments were sold during the fourth quarter last year, equal to 27 per cent of the quantity sold in the previous quarter.

Fifteen out of the 25 future apartments for sale in  Son Tra and Hai Chau districts will supply approximately 8,900 units. Five projects are expected to come online in 2011.