Projects see Vinaconex’s feet now stuck in cement

Troubles in the development of two big foreign-backed projects in Hanoi is causing financial harm to Vinaconex, on  one of the leading real estate companies of Vietnam. The troubles derived from unstable business situations in  the Splendora and ParkCity township developments, creating a rift between Vinaconex and one of its foreign partners, a company source said.

In the Splendora project, Vinaconex in 2006 set up a joint venture with South Korea’s Posco E&C to build a $2.1 billion urban development area located in An Khanh commune of Hoai Duc district, on the outskirts of Hanoi.

The first phase of the project, covering  50 hectares, is estimated to finish in 2013 including villas, terrace houses, apartments, mix-used building, commercial, business and services centre, sport centre, outdoor swimming pool, tennis court and green park.

The second phase, stretching in nearly 80ha, was also started some months ago with apartments, villas and terrace houses. But, the joint venture has experienced many conflicts with homebuyers.

The buyers claim they have suffered big losses because the consumer price index (CPI) was used as a barometer for charging semi-detached and villas with poor materials in this project.
Moreover, buyers also claim that the developer has used poor quality materials for houses and lack of infrastructure.

According to a source from the joint venture, Slendora is expected to contribute profits to Vinaconex in 2013. But, these conflicts have raised doubts about these predicted benefits.

Adding another complication is the frozen real estate market. With home sales at a near standstill,  Vinaconex wanted to slow down the project’s process, in order to wait for the market’s recovery. The Korean partner, however, did not agree with this proposal.

The situation in ParkCity was more difficult because of unstable land, the source said. Vinaconex is now merely hoping to recover enough capital investment which it poured into this project.
ParkCity Hanoi is located in a prime location in Ha Dong district, covering 77 hectares.  It was designed to become a complex accommodation which will provide 952 villas, more than 6,000 apartments, trading centre, central park and international school.

Started in 2009 the project is developed by a joint venture between Vinaconex Hoang Thanh – an affiliate of Vinaconex and Malaysia’s Perdana ParkCity.

Up to now the joint venture poured a total of VND 1,900 billion ($90 million) into the project. But very little work has been done as the partners struggle for a solution to the sinking land.

A Vinaconex source faulted the foreign partner for a lack of ability and enthusiasm to implement this project, leaving Vinaconex to try to sell out its stakes in Vinaconex Hoang Thanh to other parties.