Real estate project transfer facing difficulties

The current buying, selling and transferring of real estate projects faces many difficulties in legal procedures.

In the last months of 2024, in the context of scarce housing supply, many domestic and foreign real estate businesses, with abundant financial resources, are actively "hunting" for clean land funds and projects with clear legal status to continue investing in order to anticipate the new cycle of the market.

Prioritize projects with clear legal status

According to records, in recent months, many new project investment deals have been continuously announced. For example, in September, Truong Son Real Estate Company and Him Lam Company registered to implement a residential project in Duc Hoa district, Long An province with an area of ​​214,921 hectares and a total investment of VND11,221 billion.

Also in September, Everland Group proposed to study investment in 2 new urban areas in Hai Phong City, with a total investment of nearly 5,000 billion VND. Of which, the Hong Thai urban area project in An Duong district has a scale of 21.8 hectares. The total estimated cost is about 1,900 billion VND, of which the site clearance cost is about 92 billion VND. Meanwhile, the urban area project in Hoa Dong commune and Lam Dong commune, Thuy Nguyen district has a scale of about 30.6 hectares. The total estimated cost is about 2,992 billion VND, of which the site clearance cost is about 127 billion VND.

In addition, this group also registered to build a new urban area project G19 in Kim No commune, Dong Anh district, Hanoi. The project has a total preliminary implementation cost of about 2,183 billion VND, expected to be implemented in the period of 2024 - 2029. However, this enterprise was disqualified due to not meeting the requirements on capacity and experience.

In Ho Chi Minh City, recently, SkyWorld Development Company Limited, a subsidiary of the Malaysian group, announced that it had acquired 100% of the shares of Thuan Thanh Real Estate Production, Trading and Business Joint Stock Company for VND350 billion. Accordingly, Thuan Thanh is the sole and legal user of the 2,060 m2 land plot in District 8, Ho Chi Minh City.

Meanwhile, Nishi Nippon Railroad, a company from Japan, acquired 25% of the shares of the Paragon Dai Phuoc project (Dong Nai) from Nam Long Group for 26 million USD. Similarly, Tripod Technology Corporation (Taiwan - China) "acquired" an 18-hectare industrial land plot in Ba Ria - Vung Tau from Sonadezi Chau Duc Company.

A few months earlier, the Southern market witnessed a major deal between Kim Oanh Group Corporation in cooperation with two Japanese partners, NTT Urban Development, Sumitomo Forestry, and Kumagai Gumi Co. Ltd, to jointly implement The One World project in Binh Duong, with a total investment of more than 1 billion USD.

Sharing with reporters, the investment consulting director of a real estate company revealed: "We are working with international corporations and investment funds. They said they really want to buy real estate projects in Vietnam or cooperate in investment construction, product exchange, general sales agency...

In particular, priority is given to apartment projects, residential areas, land plots, and townhouses, but importantly, the project must have clean legal status, have completed land tax obligations, have or are about to have a construction permit, and be eligible for sale...".

Vietnam's real estate market is very attractive to foreign investors. Photo: HOANG TRIEU

Legal entanglement, difficult to transact

According to Mr. Tran Minh Ngoc Viet - General Director of Vietpearl Group Real Estate Corporation, domestic and foreign investors are actively "hunting" for projects or clean land funds in areas with strong development potential in the future.

Vietpearl Group is also looking for opportunities to expand its land fund and is ready to discuss projects for sale. However, the process of buying, selling and transferring projects is currently facing many difficulties in legal procedures, especially procedures related to project transfer.

Mr. Viet said the biggest obstacles in transferring projects are legal issues and land valuation. According to his survey, about 60% of potential projects are facing difficulties due to lengthy approval procedures or land prices that are not in line with reality.

If these problems are resolved, land fund trading activities will be very exciting, especially for the industrial land segment and well-planned residential areas, meeting the needs of domestic and foreign investors.

Ms. Tran Thi Khanh Linh, Deputy Director of Savills Vietnam Investment Consulting, said that foreign investors are always looking for good-priced real estate projects in Vietnam, especially in central cities. However, it is important that the project's legal status is clear and ready for implementation. In fact, many projects have encountered delays in the implementation process, leading to losses for investors.

Ms. Linh informed that in 2024, Savills welcomed and advised many domestic and foreign investors. These investors requested to invest in many types of assets, but they were particularly interested in operating real estate, such as office buildings. As for residential real estate, they are still looking because the supply is very scarce.

However, with the adoption and application of real estate-related laws, Ms. Linh believes that the market will have positive adjustments, helping to strengthen the legal system and create a favorable basis for investors.

In fact, investors from Japan, Singapore, Malaysia, South Korea and China have long been interested in Vietnamese real estate. Recently, there has been an increase in the number of investors from Europe and the Middle East.

Projects with clear legal documents, urban areas in Ho Chi Minh City and the provinces surrounding Ho Chi Minh City with convenient traffic infrastructure will continue to attract investors. Ms. Linh believes that when the economy and real estate market recover in 2025, investors will be more confident in participating in projects, and supply will become more abundant.

As a person who directly advises and works with the parties, brokerage consultant - Dr. Le Minh Phieu, founding and managing lawyer of LMP Lawyers, believes that for a project sale and purchase transaction to be successful, many factors are needed. Among them, the harmony and resonance of the parties is very important.

In particular, the put option is one of the issues that foreign investors are very interested in in order to prepare for future situations when the project fails to achieve its set business goals. Not only that, the buyer also sets additional requirements in case the seller does not have enough financial conditions to fulfill its repurchase obligation when the buyer exercises the put option.

M&A deals decline

According to statistics from the Foreign Investment Agency, in the first 10 months of 2024, there were 2,669 capital contribution and share purchase (M&A) transactions by foreign investors, with a total capital contribution value of more than 3.68 billion USD, down 10.4% in quantity and 29% in value compared to the same period in 2023. In particular, the real estate sector is said to be heavily affected by legal issues, causing a decrease in supply. 2024 is the year when real estate-related laws begin to be implemented and applied. Therefore, many unclear issues make investors and the market wait.

Source: https://nld.com.vn/chuyen-nhuong-du-an-bat-dong-san-gap-kho-19624122522114545.htm