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Information about Ho Chi Minh City resuming the Thu Thiem land auction plan (in the new urban area of Thu Thiem, Thu Duc City) has been positively evaluated by the market with special attention from the public. Because 4 land lots in this plan were previously abandoned by businesses in 2022.

At that time, Ngoi Sao Viet Real Estate Investment Company Limited (under Tan Hoang Minh Group) won the auction for lot 3-12 with a price of 24,500 billion VND. Binh Minh Investment Development and Trading Company Limited won the auction for lot 3-9 with a price of 5,026 billion VND. Sheen Mega Joint Stock Company won the auction for lot 3-8 with a price of 4,000 billion VND. Dream Republic Joint Stock Company won the auction for lot 3-5 with a price of 3,820 billion VND.

The winning bid was thousands of billions of VND higher than the starting price. Ngoi Sao Viet even bid more than 2.4 billion VND/m2, creating a "shock" to the market. The total amount of money deposited by the 4 businesses was 1,051 billion VND. But then, all 4 winning businesses withdrew their deposits, and the auction was canceled.

Làm gì để đấu giá đất Thủ Thiêm thành công sau việc 4 công ty bỏ cọc? - 1 — One of the Thu Thiem lands will be auctioned (Illustration photo: Hai Long).

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said he supports the plan to restart the Thu Thiem land auction so that the land lots can be put into exploitation soon, creating resources for the city's development. However, the auction timing seems inappropriate, because the Decree amending Decree 44/2014 regulating land prices is being revised for the Government to promulgate.

Mr. Chau said that when the revised Decree is issued, the starting price for the auction can be determined. Because the old price given for the land lots auctioned for land use rights before (2021) is no longer legally valid and has no reference value to give a new price when the revised Decree has not been completed.

In addition, Mr. Chau also mentioned that the law amending and supplementing a number of articles of the Law on Property Auction has not been approved yet and may not be issued in time this year. This will also affect land auctions if Ho Chi Minh City immediately starts work on the above 4 land lots.

Ms. Duong Thuy Dung, Senior Director of CBRE, also agreed that the launch of the Thu Thiem land auction process brings many positive factors to the market. Domestic and foreign investors are interested in and looking forward to this auction, because Thu Thiem is one of the important locations in Ho Chi Minh City - the new center of the future city.

However, according to her, the city has a lot of work to do to operate effectively and overcome challenges that the previous auction could not solve.

She pointed out three challenging issues. Firstly, investors who previously won the bid but reneged on their deposits must ensure and screen the financial health of the business, and have a strict control process with the winning bidder.

Second, many opinions say that the starting price is too low and the deposit is also low, which can easily lead to businesses abandoning the deposit after winning the bid. Ms. Dung proposed that there should be a mechanism and method for evaluating land prices and appropriate starting prices when land prices on the market increase every day.

Third, Ms. Dung assessed that foreign investors are very interested in land auctions. However, in the past, many units told CBRE that they did not know about the auction process, or if they knew, they were too rushed to complete the documents and lost the opportunity to participate. Therefore, she proposed a transparent and clear auction process so that foreign investors can participate and compete fairly with domestic investors.

Mr. Vo Hong Thang, Director of Consulting Services and Project Development at DKRA Group, also expressed the view that it is necessary to carefully consider the financial health of the enterprise when participating in the auction. When the enterprise meets the financial requirements well, the success of the auction will increase.

Conditions for businesses to participate need to be clearly screened with specific criteria, such as establishment time of 5-10 years, financial reports in the last 3-5 years, bank account statements must have balance limits and balance maintenance period of 6 months to 1 year at the bank...

In the current context, Mr. Thang predicts that the auction can still be successful, because foreign enterprises are also very interested in Thu Thiem land fund, not just domestic enterprises. A transparent, public process, widely announced information... to call for interested investors to participate in the auction is necessary to attract a large number of bidding partners.

Another issue he mentioned is that the cases of deposit cancellation are only local, not all. International practice when organizing auctions is similar, businesses prove their finances, make a deposit, and when they win the bid, if they do not pay the purchase price, they lose the deposit. He believes that this issue should not be criminalized, creating a heavy mentality for the market.

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