Owners’ stand-off immobilises Splendora

February 13, 2017 | 15:32

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The Splendora project, in which Posco E&C holds 50 per cent, does not look like it is going to be completed by 2018 as was planned earlier due to a recent proposal submitted to the local authorities to adjust the 1/500 planning of the project.

According to a recent report to shareholders on the progress of the North An Khanh project, also known as Splendora, in Hoai Duc district of Hanoi, general director of Vietnam Construction and Import-Export JSC (Vinaconex) Do Trong Quynh said that the company would continue with the procedures to adjust the 1/500 planning of the project in order to deploy phase II in time, which consists of apartments, villas, shophouses, and the park in the centre.

Phase II was supposed to start construction in mid-2012. The delay was due to a conflict between the two partners.

In 2013-2014, Vinaconex considered transferring its 50 per cent stake in joint venture An Khanh JVC, developer of the Splendora project, but decided eventually otherwise. In 2016, Vinaconex once again declined the right to buy Posco E&C’s 50 per cent stake, despite being unable to find other buyers. It also still hadn’t succeeded in finding a buyer for its stake.

The disagreement started in 2012-2014, when the real estate market was frozen. At the time, Vinaconex wanted to drag the project out to wait for the difficult period to be over, then launch it for sales. Meanwhile, Posco E&C wanted to maintain the progress in order to avoid negative effects on the Posco brand.

Because they both hold 50 per cent, neither has the right to decide what happens to the project. Thus, they considered dividing the project into two parts to be implemented by each, but they could not reach an agreement on that either.

When the first phase was opened to residents, there were many conflicts between the customers and the developer because of the planning and the quality so the image of the Splendora urban area is not very positive in investors’ eyes. An Khanh JVC reported a loss of VND340 billion ($15 million) in 2015 and VND83.5 billion ($3.68 million) in 2016. These results are disappointing, especially in the context that the real estate market has been picking up during the period.

Splendora urban area sprawls over 264.13 hectares adjacent to Thang Long Boulevard. According to the previously approved planning, the project includes shophouses, villas, a 6.6-hectare artificial lake, gardens, trees, international schools, entertainment areas, offices, and shopping areas. The project has a total of 6,440 apartments and 1,311 villas and shop houses. In the first phase, the project has finished 496 apartments, 236 shop houses, and 317 villas. The second phase was expected to start in mid-2012, but as of now it remains idle.