Real estate developers from Hanoi and HCM City once flocked to Da Nang to seek opportunities in the market that promised to glitter like gold, especially in the luxury-hotel segment.
Vu Long Chau JSC, for example, once organized an impressive ground-breaking ceremony to build the Da Nang Center and Han Riverside complex, totaling $125 million. The investor, at the ceremony, said that the projects would be completed and put into operation by 2011.
However, the expected hotels are now only deserted land plots, covered with wild grass and broken materials.
Local authorities had also placed high hopes on the $180 million Vien Dong Meridian Tower on Hung Vuong Street that they licensed in May 2008. This was expected to be a 48-story twin tower.
Like many other projects, the project has not even begun. Only when Da Nang authorities threatened to take back the land allocated to the project in July 2009 did the investor start project implementation, while committing to put the project into operation by December 2012.
But no further action was made after the groundbreaking ceremony. The investor, after receiving an ultimatum from local authorities on the project’s implementation deadline, committed to kick off the project in early 2014. However, there has been no sign that the investor has kept its promise.
The nearby VND1 trillion Golden Square project, covering an area of 10,664 square meters, has been proceeding at a snail’s pace as well. Though the project kicked off in January 2008, only two stories of the tower and a few sample apartments have been completed.
CBRE Vietnam, a real estate service firm, said that 12 projects in Da Nang had seen no activity since November 2013.
Analysts noted that most of the projects started six to seven years ago when the Da Nang real estate market was very hot. However, as the market has cooled rapidly, investors have become hesitant to inject money into projects.
Le Anh Trieu, general director of Phu Gia Thinh Company, noted that most of the projects’ investors were from HCM City and Hanoi, and thus Da Nang became frozen after Hanoi and HCM City markets cooled down.
“In general, the ‘golden land’ areas were reserved for shopping malls and high- end apartment blocks,” Trieu explained. “However, even affordable apartments are unsaleable, let alone high-end products.”
Da Nang City’s authorities have lost patience with the investors who have not implemented their registered projects, and have threatened to revoke investment licenses.
However, an official with the Da Nang City Department of Natural Resources and the Environment admitted that it would be very difficult to revoke the licenses and take back the land already allocated to investors. And it would be even more difficult to find new investors for the projects.
“No investor has made official commitments to take over the projects,” he said.