Better abandoned than completed
The situation of abandoned villas worth tens of billions of dong is not difficult to see in many places, especially in Hanoi . Over time, these villas are overgrown with grass and covered with moss... not only causing waste but also creating a "ghost" urban space even though they already have owners.
Mr. Tran Thai Son - the owner of a villa in an urban area in the west of Hanoi - said that based on current market prices, his villa is worth about 28-31 billion VND. The current price is nearly 3 times higher than the price he bought this villa for in 2010.
Sharing the reason why this villa has been abandoned for more than 10 years, Mr. Son said that although it has been abandoned, the value of the villa has still increased. Meanwhile, the infrastructure and utilities in the area are still deserted, making the rental demand and rental price not high. Besides, the investment cost to complete this villa also cost more than 1 billion VND.
"When I bought this villa, I also used financial leverage of up to 60% of its value. If I continue to complete it for rent, but the rental price is not high, it will create great pressure for me to pay off the debt," said Mr. Son.
Abandoned villas are scattered in an urban area in Hoai Duc district, Hanoi (Photo: Ha Phong).
According to Mr. Son, the problem of finishing for rent or leaving it abandoned has been considered many times by him, looking for a solution. But in terms of profit, finishing for rent is not feasible.
"My villa has a total floor area of over 500 square meters, and a simple investment to complete it would cost about 1.5-1.8 billion VND. Meanwhile, the estimated rental price of this villa is only 30-35 million VND/month. So, it will take me 5-7 years to recover the capital spent to complete it, not to mention a series of problems arising from management, interest and damage to the project...", Mr. Son said.
According to Mr. Tran Dinh Nguyen - a professional real estate investor in Hanoi - villas are a real estate product that attracts great attention from investors in any stage of the market. Investors who buy villas are often "tycoons" and those who use financial leverage.
"At the "hot" time, there are investors who are willing to borrow up to 70% of the value from the bank to buy a villa for speculative purposes without the need to live, do business, or rent. As for investors who are "rich", they have money, so buying a villa can be just to show off, to keep the money without caring about how to use it," Mr. Nguyen shared.
The villa owner did not choose to spend billions to complete the villa for rent (Illustration: Ha Phong).
According to Mr. Nguyen, if they are not real buyers, most investors who buy villas will accept leaving them abandoned without considering finishing and putting them into use. What these villa owners care about is how much the price will increase, or when they need money to sell.
"The lowest price for finishing the interior of a villa ranges from 3-4 million VND/m2. For example, the cost to complete a 200m2, 3-storey villa is about 1.8 billion VND to 2.4 billion VND," Mr. Nguyen cited.
Difficult to handle abandoned villas
Explaining the situation of abandoned villas in many urban areas in Hanoi, some real estate experts said that this is the result of a long period of booming real estate market, with everyone investing in real estate. Real estate "tycoons" have placed too much hope on a "virtual" demand that is speculative rather than the real needs of the people.
Abandoned million dollar villa causes waste (Illustration: Ha Phong).
Sharing about this situation, according to Mr. Dao Ngoc Nghiem - Vice President of Hanoi Urban Development Planning Association - the similarity between output products (types of housing, urban areas) and social needs is not uniform. In the past, many investors in this segment mainly focused on housing products, not paying attention to infrastructure, living facilities...
According to Mr. Nghiem, whether or not the abandonment situation can be completely resolved is a difficult question. Because, in the current legal system, there is no prohibition on owning multiple houses. There is also no restriction on real estate business.
According to a real estate company director, abandoned villas occur frequently in old urban areas. Currently, many new urban areas are being built with investors focusing on investing in full amenities, green space, etc. to attract old investors.
"Some investors even offer incentive programs for customers who own completed villas and put them into use... to avoid turning them into "ghost" urban areas. In addition, not leaving villas abandoned also promotes the development of urban areas' utilities," the real estate company director shared.
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