Land price risk "threatens" development

Price fluctuations in the local market when large projects appear have created virtual land prices, forcing consulting units to choose a calculation method to ensure that the land price that the province leases to investors is at the right price. With large projects waiting for this land price to lease in the province, it is considered a difficult problem from many different perspectives.

Endangered

The Ocean Valley Tourism Complex Project in Tien Thanh Commune, Phan Thiet City, also known as the NovaWorld Phan Thiet project of Delta Valley - Binh Thuan Company Limited, is very large in scale, covering 1,000 hectares, stretching 7 km along the coastline. Up to now, this place has been put into operation in phase 1 with a diverse system of utilities such as the 5-star Movenpick Resort Phan Thiet hotel, the 4-star Radisson Resort Phan Thiet, the 36-hole PGA golf course cluster; Circus Land amusement park, Bikini Beach Square - Sea Park, Sport Complex sports center, a chain of restaurants, cafes... has attracted nearly 150,000 visitors to stay, play and entertain in the past time. Accordingly, a series of ancillary industries serving residents and tourists such as mini hotels, restaurants, convenience stores, food and beverage, cafes, beauty salons, laundry, etc. have been, are and are about to appear according to the business plans of investors after receiving the house handover. In particular, on May 19, the NovaWorld Phan Thiet Economic Tourism Urban Area was restarted, continuing to open up an attractive business environment, stimulating investors, and at the same time creating a series of jobs for workers. Moreover, it also brings expectations as the Provincial People's Committee assessed: "If the entire project comes into operation, it will not only create a standard tourist destination for Binh Thuan province, but the accompanying traffic infrastructure works will also help connect to form a large traffic system for the province, facilitating the implementation of investment projects".

However, in order for the restart to be as effective as expected, the project needs to resolve related legal problems as soon as possible. Previously, in early May 2023, No Va Real Estate Investment Group Joint Stock Company sent a petition to the provincial leaders to support the proposal to handle legal problems of Novaland projects in Binh Thuan, because it was in a critical situation. Because the cash flow from sales and project loans was locked by banks due to the failure to complete the project's legal documents, plus the pressure of paying interest every day of up to 50 billion VND. Specifically, the company proposed to urgently resolve 2 problems. That is, to allow the company to choose to pay land use fees once every 50 years according to the law and to urgently determine a reasonable land price for the company to pay land use fees, complete project legal documents, and sales legal documents.

Calculating specific land prices, not a new issue, is considered a reminder to urge the project to be completed according to the set schedule by the end of 2025. But that is also an issue that the provincial authorities have paid great attention to and coordinated to resolve. However, in the implementation, there are many different opinions, stuck with regulations when applying, especially for projects with such a large scale and multiple purposes as NovaWorld Phan Thiet, which is unprecedented in Binh Thuan. Therefore, at the end of March 2023, the Provincial People's Committee sent a document to the Ministry of Natural Resources and Environment requesting guidance on resolving difficulties in determining specific land prices to calculate land rent for the Ocean Valley Tourism Complex project.

Many problems

The content of the above document shows that the Ocean Valley Tourism Complex project has been leased land by the Provincial People's Committee with a total area of 963 hectares in 8 phases. Currently, the company is preparing the 9th phase of land lease documents with an area of 4.74 hectares. During that process, the project has been approved by the Provincial People's Committee to temporarily apply the land price in the Land Price List multiplied by the land price adjustment coefficient (coefficient K) to determine the land price for calculating land rent for the leased land area in many documents from 2017 to present. Accordingly, the company has temporarily paid the land rent to the provincial budget, after deducting the compensation, clearance and resettlement advances, the remaining amount is 139.33 billion VND.

However, the specific land price calculated at the project approved by the Provincial People's Committee is not yet available. Currently, the Provincial Department of Land Management has contracted with a consulting unit to advise on determining land prices for the above project. During the process of analyzing and evaluating the scale and nature of the project as well as the market reality in the valuation area, the consulting unit proposed applying the surplus method according to the provisions of Article 6 of Circular No. 36/2014 of the Ministry of Natural Resources and Environment to carry out the valuation. However, there are some difficulties. That is determining the time of valuation, because Clause 3, Article 108 of the 2013 Land Law states: "The time for calculating land use fees and land rent is the time when the State decides to allocate land, lease land, allow the change of land use purpose, and recognize land use rights". Meanwhile, the project has been granted land lease decisions by the Provincial People's Committee up to 8 times, lasting from 2014 to 2021. In addition, the project's 1/500 detailed construction plan was approved at a certain time, the valuation at different times led to some valuation times and the approval times of the 1/500 detailed construction plan, making it difficult to apply the legal basis and process input information. Not only that, the project had some valuation times before the 2013 Land Law took effect. Therefore, there are many different opinions on the legal basis for valuation methods, implementation authority, and specific land valuation at this time.

In addition to the above-mentioned recommendations, the Provincial People's Committee also requested the Ministry of Natural Resources and Environment to provide specific guidance on investment capital rates; norms, unit prices; and methods for calculating construction price slippage in cases where the time of issuance of investment capital rates and investment estimates does not coincide with the time of valuation. At the same time, there should be specific criteria to determine the similarity of comparable assets; methods to prove the similarity of comparable assets and appraised assets; basis for determining the rate of increase in rental prices and sales prices for assets with long business progress... Because this project is large-scale with many complex investment and business items, including special business items that are not yet available in Binh Thuan province. Therefore, if we find an early solution for the specific land price to calculate the land rent, and coordinate to open up the operation of NovaWorld Phan Thiet at the right time, it will not only create symbiosis for businesses that play the role of a locomotive in this area but also decide the bustle of a new attractive tourist destination to help Binh Thuan rise to the leading position in resort tourism in the region. Not only that, it also opens up a direction for calculating suitable land prices so that large industrial parks such as Ham Tan are qualified to start construction...

Regarding the progress of approving specific land prices, the Provincial People's Committee has reported to the Standing Committee of the Provincial Party Committee for consideration in Report No. 218/BC-UBND dated October 26, 2022 and Report No. 186/BC-UBND dated September 16, 2022. Accordingly, currently, Saigon Thai Duong Valuation and Investment Joint Stock Company is collecting additional information to complete the valuation results. A number of enterprises in the province are coordinating and providing some information to serve the work of determining land prices for the above project.

Source