Struggling with Land Costs: Lotte Withdraws from Eco Smart City, Empire City’s 88-Story Tower Developer Seeks Help, Novaland Stuck in 13 Projects for Nearly a Decade

Empire City Developer Seeks Financial Obligation Reassessment

Recently, King’s City Joint Venture Company Limited, the developer of the Thu Thiem Observation Tower Complex (commercially known as Empire City), submitted a document to the Ho Chi Minh City People’s Committee requesting a reassessment of additional financial obligations for the project. The company disagrees with the requirement to pay an additional VND 8.8 trillion in land use fees.

King’s City Joint Venture Company Limited stated that on September 5, 2016, Ho Chi Minh City issued a decision allocating the company over 11 hectares of land with land use fees for a 50-year term, starting from June 23, 2015, to implement the project. By early 2017, the company had fulfilled its financial obligations for the project, totaling nearly VND 3.6 trillion.

The city’s decision at that time explicitly stated that the developer “is not required to pay additional financial obligations when adjusting the land use form from one-time rental payment to land allocation with land use fees.” Based on this, King’s City Joint Venture Company Limited has constructed and handed over three clusters with nearly 1,200 apartments to residents, who are now living comfortably.

However, since 2019, the project has been stalled due to unresolved additional financial obligations following the Government Inspectorate’s conclusion, resulting in significant time, cost, and resource waste for both the state and investors.

According to King’s City Joint Venture Company Limited, authorities recently proposed an additional financial obligation of over VND 8.8 trillion, a 246% increase from the land use fees already paid. Additionally, the proposal includes a clause stating that if state authorities later conclude that further financial obligations are required, the company must comply.

Therefore, the company requests that authorities reassess the additional financial obligations in line with the Government Inspectorate’s conclusion, based on the 2015 land allocation date and applying Circular 36/2014, which was effective at that time.

The company also emphasizes the need to consider planning adjustments in determining additional financial obligations to avoid repeated processes, which would waste resources for both the company and management agencies.

The company argues that the proposed additional financial obligations are solely based on the Government Inspectorate’s conclusion and do not account for planning adjustments that may affect land use value. The project has adjusted the land area allocation between plots to align with traffic and 1/2,000 planning, without changing the overall planning indicators.

Lotte Returns Thu Thiem Project

Recently, Lotte Properties HCMC Co., Ltd. (a subsidiary of South Korea’s Lotte Group), the developer of Thu Thiem Eco Smart City, sent a document to the Ho Chi Minh City People’s Committee and the Department of Finance, announcing the termination of the contract for the Thu Thiem Eco Smart City project in the new Thu Thiem urban area.

In the document, Lotte Properties HCMC Co., Ltd. affirmed that it had patiently waited for eight years (from the signing of contract No. 4647/HD-UBND with the Ho Chi Minh City People’s Committee on July 26, 2017, until the completion of land price appraisal on June 30, 2025) and had always fully complied with its investor obligations under the law.

However, due to the impact of the Government Inspectorate’s process and delays in land price appraisal, the Thu Thiem Eco Smart City project has been severely stalled. This has led to a significant increase in land use fees, land rent, and total investment costs, as well as changes in legal policies, making project adjustments inevitable.

Lotte Properties HCMC Co., Ltd. stated that it cannot continue implementing the project, including fulfilling land use fee obligations. This decision was made after a comprehensive evaluation and careful discussions among investors.

Novaland Faces Challenges with 13 Projects

Recently, Mr. Cao Minh Hieu, Vice Chairman of Novaland Group’s Executive Board, stated that the company is facing challenges with 13 projects allocated land from 2015 to 2016 but has not yet received financial obligation notices from tax authorities, preventing the payment of land use fees. Meanwhile, current regulations impose a late payment interest rate of up to 5.4% per year, adding hundreds of billions of dong in costs to the projects.

Mr. Hieu cited the RichStar project as a typical example. Although the Ho Chi Minh City Price Appraisal Council determined the land value at VND 689 billion in 2016, the project was later stalled due to land origin reviews.

Mr. Hieu noted that over the past decade, the company has been unable to pay, but if late payment interest is applied, the additional amount would exceed VND 370 billion. Meanwhile, the project cannot issue land use rights certificates, raise capital, or circulate funds, forcing the developer to spend an additional VND 300 billion to support residents with management and operation.

For large developers like Novaland, Mr. Hieu suggested that one project could offset another. However, for smaller developers with only one or two projects, if one project is stalled, it could lead to bankruptcy.

The VND 2.4 trillion urban area near Vinhomes Ocean Park and Thanh Tri Bridge will soon include social housing for over 900 people.

Hanoi has recently adjusted the detailed planning for three land plots in the Dang Xa 2 Urban Area.