Price fluctuations in the regional market when large projects emerge have created artificial land prices, forcing consulting firms to choose calculation methods to ensure that the land leased by the province to investors is at the correct price. Large projects awaiting these land prices in the province present complex problems from many different perspectives.
It's critical.
The Ocean Valley Tourist Complex project in Tien Thanh commune, Phan Thiet city, also known as the NovaWorld Phan Thiet project, by Delta Valley - Binh Thuan Co., Ltd., is a massive project spanning 1,000 hectares and stretching along 7 km of coastline. To date, Phase 1 has been operational, offering a diverse range of amenities such as the 5-star Movenpick Resort Phan Thiet, the 4-star Radisson Resort Phan Thiet, a 36-hole PGA golf course, Circus Land amusement park, Bikini Beach Square and Park, Sport Complex, and a chain of restaurants and cafes. It has attracted nearly 150,000 visitors for accommodation, recreation, and entertainment in recent times. Accordingly, a series of supporting industries serving residents and tourists, such as mini-hotels, restaurants, convenience stores, food and beverage outlets, cafes, beauty salons, laundry services, etc., have already appeared, are currently operating, and are preparing to appear according to the business plans of investors after receiving the handover of the properties. Particularly on May 19th, the relaunch of the NovaWorld Phan Thiet Economic and Tourism City is continuing to create an attractive business environment, stimulating investors and simultaneously creating numerous jobs for workers. Furthermore, it carries the expectation, as the Provincial People's Committee assessed: "If the entire project becomes operational, it will not only create a standard tourist destination for Binh Thuan province, but the accompanying transportation infrastructure will also help connect and form a large transportation system for the province, facilitating the implementation of investment projects."
However, for the restart to be as effective as expected, the project needs to have its legal obstacles resolved as soon as possible. Earlier in May 2023, Nova Real Estate Investment Group Joint Stock Company submitted a request to the provincial leadership for support in resolving the legal issues facing Novaland 's projects in Binh Thuan, as they were in a critical situation. Sales revenue and project loans were being held up by banks due to incomplete project legal procedures, compounded by daily interest payments of up to 50 billion VND. Specifically, the company requested the urgent resolution of two key issues: allowing the company to choose to pay land use fees in a single payment for 50 years as stipulated by law, and urgently determining a reasonable land price so that the company can pay land use fees and complete project and sales legal procedures.
Determining specific land prices is not a new issue; it's considered a reminder to expedite the project's completion according to the set schedule by the end of 2025. However, it's also an issue that provincial authorities have been very concerned about and have coordinated efforts to resolve. Nevertheless, there have been differing opinions and obstacles in applying regulations, especially for a project of such large scale and multi-purpose use as NovaWorld Phan Thiet, which is unprecedented in Binh Thuan province. 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 for calculating land lease fees for the Ocean Valley Tourist Complex project.
Many obstacles
The above document indicates that the Ocean Valley Tourist Complex project has been granted land leases by the Provincial People's Committee with a total area of 963 hectares in eight phases. Currently, the company is preparing the application for the ninth land lease phase, covering an area of 4.74 hectares. During this process, the Provincial People's Committee has agreed to temporarily apply the land price from the Land Price Table multiplied by the land price adjustment coefficient (coefficient K) to determine the land price for calculating land lease fees for the leased land area in several documents from 2017 to the present. Accordingly, the company has temporarily paid land lease fees to the provincial budget, after deducting advance payments for compensation, clearance, and resettlement, leaving a balance of 139.33 billion VND.
However, the specific land price for the project approved by the Provincial People's Committee has not yet been determined. Currently, the Provincial Land Management Department has contracted with a consulting firm to determine the land price for the project. Through analysis and evaluation of the project's scale and nature, as well as the market conditions in the valuation area, the consulting firm has proposed applying the surplus method as stipulated in Article 6 of Circular No. 36/2014 of the Ministry of Natural Resources and Environment for valuation. However, some difficulties are being encountered. One is determining the valuation time, because Clause 3, Article 108 of the 2013 Land Law states: "The time for calculating land use fees and land lease fees is the time when the State decides to allocate land, lease land, permit the change of land use purpose, or recognize land use rights." Meanwhile, the project received land lease decisions from the Provincial People's Committee at eight different times, spanning from 2014 to 2021. Furthermore, the project's 1/500 scale detailed construction plan was approved at a specific time. The valuation at various points in time has led to discrepancies between the valuation date and the date of approval of the 1/500 scale detailed construction plan, making it difficult to apply the legal basis and process input information. Moreover, some of the project's valuations predate the effective date of the 2013 Land Law. Therefore, there are differing opinions regarding the legal basis for the valuation methodology, the authority to implement it, and the specific land valuation at that time.
In addition to the proposed guidance on the above content, the Provincial People's Committee also requested the Ministry of Natural Resources and Environment to provide specific guidance on investment capital rates; norms and unit prices; and methods for calculating construction price escalation in cases where the issuance date of investment capital rates and investment estimates does not coincide with the valuation date. Furthermore, specific criteria are needed to determine the degree of similarity between comparable assets; methods for proving the similarity between comparable assets and the appraised assets; and the basis for determining the rate of increase in rental and sales prices for assets with long business cycles… This is because the project is large-scale with many complex investment and business items, including some unique business items not yet present in Binh Thuan province. Therefore, if a solution can be found soon regarding the specific land price for calculating land lease fees, and if NovaWorld Phan Thiet's operations can be facilitated in a timely manner, it will not only benefit the leading enterprise in the area but also determine the vibrancy of a new and attractive tourist destination, helping Binh Thuan rise to a leading position in resort tourism in the region. Furthermore, it will open up a suitable land pricing approach, allowing large industrial zones like the one in Ham Tan to commence 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, Saigon Thai Duong Valuation and Investment Joint Stock Company is currently collecting additional information to finalize the valuation results. Several businesses in the province are cooperating and providing information to support the land price determination for the project.
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