Resettlement apartments in Thu Thiem area waiting for auction

SGGP

After 5 years since completion, thousands of resettlement apartments in Thu Thiem area in District 2 of Ho Chi Minh City (HCMC) are still mostly vacant. In 2020, the city has to allocate a large sum of money for the maintenance and operation of these apartment buildings, which is obviously a waste of budget and human resources.

Duc Khai Resettlement Apartment Blocks in District 2 of HCMC. (Photo: SGGP)

Duc Khai Resettlement Apartment Blocks in District 2 of HCMC. (Photo: SGGP)

In April 2015, block series R7 of Duc Khai Resettlement Area welcomed its first residents and was supposed to fill all 741 apartments after a short time. Sadly, a year had already passed, yet only 252 apartments were occupied. Now after 5 years, the total number of households here is merely 414, but the property managers have to provide necessary utilities for all 5 blocks since these people are scattering there

Statistics from District 2 Public Service Co. Ltd. – the management unit here – reveal that there has been a loss of over VND100 million (approx. US$4,300) in the first 6 months this year on overhead cost, mostly on electricity for common areas of these buildings.

Ineffective as it may seem, these blocks are still in use. There are 25 resettlement apartment blocks left empty behind it, owned by Thuan Viet Joint Venture, Vietracimex Joint Venture. Around these buildings, weeds are happily grown. However, these companies still need to pay for security guards to ensure safety of the area.

Explaining the current unused status of resettlement apartments in Thu Thiem area, Deputy Director of the HCMC Department of Construction Huynh Thanh Khiet said that formerly, residents in the area chose a resettlement apartment or land because the compensation sum was not in accordance with the market price. Now the compensation money observes the updated market price, so they prefer this. That leads to a surplus of apartments.

To tackle the issue, HCMC People’s Committee assigned the Center for Housing Management and Construction Inspection (under the HCMC Department of Construction) to comprehensively manage those buildings and prepare an auction plan for the empty apartments. The HCMC Center for Land Resource Development and the Auction Center (under the HCMC Department of Justice) carried out the auction.

Until now, there have been 3,790 apartments available for auction (accounting for the surface area of 38.4ha) in Binh Khanh Ward (belonging to blocks R1, R2, R3, R4, R5). Sadly, not many were sold since they are traded in large lots, requiring a huge sum of investment that hardly can any company afford.

Updated information about the 3,790 apartments up for auction shows that they are divided into two parts for trading. The first one consists of 2,220 apartments in the blocks of R1, R2, R3, with the total value of land use and construction of VND7,977 billion ($345 million). The second one has 1.570 apartments in the blocks of R4, R5, valued at VND6,200 billion ($268 million).

Being an expert in real estate, General Director of Hoang Anh Saigon Real Estate Co. Doan Chi Thanh commented that it is not hard at all to sell those apartments because they are sited in the ‘golden location’. What matters now is the selling method.

He suggested that there must be a press conference to announce this auction publicly. Then payment methods must be clearly identified. At the moment, most investors only need to pay 30 percent of the required sum to be allowed renovation and retail trading. The rest can be paid in 2-3 years. Therefore, a flexible payment method is sure to attract potential investors.

“These apartment lots should not be divided into smaller parts for sale since it can complicate the market due to uncontrollable house prices. They should be sold to one investor for a more consistent marketing and trading strategy. At present, many investors have shown their interest in these apartments and are willingly to pour thousands of billions of VND into this project. That is the reason why I do believe a flexible payment method from the local authorities can lead to a success in auction”, said Mr. Thanh.

By Luong Thien – Translated by Huong Vuong

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