Can Grand Pacific apartment buyers reclaim their $4.5 million?
Can Grand Pacific apartment buyers reclaim their $4.5 million?
After ten years of development, the Grand Pacific luxury apartment project in the northern port city of Haiphong's Hong Bang street has just finished structural work for three buildings. The developer has received $4.5 million from apartment buyers. Will this money continue to lay stagnant along with the project?
Four years at a snail’s pace
Regarding Grand Pacific’s construction scale, the land area is 22,436.3 square metres for the construction of three 20 story buildings with 470 apartments.
The main investor is Pacific Investment Ltd., a fund management group based in California which focuses on real estate. Initially, the project was managed and implemented by South Korean company GNS Technology Co. Ltd. in cooperation with Australian company Lobana Trading Co., PTY Ltd. However, currently, GNS Technology Co., Ltd.’s website is not functioning and Lobana Trading Co. is permanently closed.
According to the Haiphong Department of Planning and Investment, the project was licensed in 2006. The target of the project is to construct three apartment buildings for rent and purchase and one purely for rent.
The total amount of expected investment was $16.8 million. However, the developer has only disbursed $8.2 million in the end. Meanwhile, the project has received a total of $4.5 million from customers who bought 107 apartments in two buildings.
Grand Pacific’s initial plan stated that the project would finish by 2012 and have the apartments ready for customers. However, until now, it has only finished structural work and the foundation of one building. The developer has not even started working on the second building yet.
According to the Haiphong Department of Planning and Investment, the developer has stopped implementing the project in June 2013. The total delay at the moment is 47 months.
Since 2012, the department has been constantly investigating and supervising the project, as well as issued several documents demanding the investor to provide explanatory leaflets and clarify the plan for project implementation.
Looking for a way out
To find a feasible solution for the problem, the Haiphong Department of Planning and Investment has recommended that the Haiphong People’s Committee should support Grand Pacific to the most of its ability.
If the investor cannot overcome financial and operational obstacles in order to efficiently implement and complete the project as it was planned, the department will have to terminate all project activities in accordance with Vietnamese laws and regulations.
However, this is a major project with massive investment and now holds a significant amount of money raised from apartment buyers. To terminate the project, the department would have to be extremely circumspect. If the project is terminated, apartment buyers will struggle to reclaim their payments from the developer.
In addition, it is hard to make a speedy valuation of the developer’s initial investment in the project since the beginning and evaluate the land area used for the project, as well as prepare financial documents on debt deduction.
However, potential investors are lining up to take over the project and accountants will certainly have to provide these final statements to them, otherwise they cannot take over all responsibilities and enjoy the rights and benefits of the former investors.
According to the latest news from the Haiphong Department of Planning and Investment, Pacific Investment Ltd. is currently negotiating with some investors in Vietnam in order to sell its project.
