Tan Hoang Minh rescinds from the controversial purchase of US$1-billion land plot

Tan Hoang Minh rescinds from the controversial purchase of US$1-billion land plot

The real estate group will lose its escrow deposit of VND588.5 billion ($26 million) for unilaterally withdrawing from the purchasing contract.

Tan Hoang Minh Group at the midnight of January 11 announced its intention to unilaterally rescind the purchase of the land plot No.3-12 worth VND24.5 trillion (US$1 billion) in Thu Thiem New Urban Area of Thu Duc City (Ho Chi Minh City - HCMC).

Viet Star Real Estate wins an auction for land plot No.3-12 at a record price.

Under the announcement, Viet Star Real Estate Investment Company, a member of Tan Hoang Minh Group, won an auction for a land plot of 10,060 square meters in a prime location in Thu Thiem at the price of VND2.45 billion ($108,000) per square meter, or VND24.5 trillion ($1 billion) in total, beating Capital One Financial, the second-highest bidder,  by VND700 billion ($30.8 million).

“However, there has been much controversy surrounding the high winning price and the Group sees possible risks to the real estate market following the auction,” Tan Hoang Minh said, referring to a remark from Minister of Finance Ho Duc Phoc on January 4 that the price of nearly $110,000 for a square meter is “unusual”.

“There could be market distortion and severe consequence on the economy overall,” it continued.

The Group added it would soon submit an official document to the Ho Chi Minh City People’s Committee for notification and the Property Auction Service Center under the HCMC Department of Justice and the Ho Chi Minh City Land Fund Development Center to revoke the purchasing contract.

“Tan Hoang Minh fully accepts any financial obligation for unilateral rescinding the contract in accordance with the Law on Property Auction,” it stressed.

Tan Hoang Minh Chairman of Directors of Board Do Anh Dung (r) at the auction. Source: Sai Gon Dau Tu Tai Chinh

In an auction held on December 10, 2021, Viet Star Real Estate Investment Company became the highest bidder for land plot No.3-12 at the bidding price of VND24.5 trillion ($1 billion), 8.3-fold higher than the inviting price, the record high price for a square meter in Vietnam’s real estate market.

With this decision, Viet Star would lose its escrow deposit of VND588.5 billion ($26 million) as stipulated under the Law on Property Auction.

In June 2015, Tan Hoang Minh had won a land plot of 3,000 square meters at a prime location of No.23 Le Duan Street, District No.1, HCMC, with the highest bidding price of VND1.43 trillion ($63 million), but later requested to back out for alleged wrong procedures from the organizer. The Group, however, sought to purchase the land plot in June 2016 by paying a penalty of VND260 billion ($11.4 million).

Prime Minister Pham Minh Chinh in late December 2021 requested Government agencies to check on irregularities at recent land auctions, while the State Bank of Vietnam is tasked with supervising banks that provide loans for investors in these cases.

Under article No.73 of the Law on Property Auction, the cancellation of property auction results would lead to the restoration of the original state of the property, for which the ownership of the land plot would be returned to Ho Chi Minh City Land Fund Development Center.

Hanoi Times