Planning inconsistencies, other legal obstacles hassle Novaland projects

Over the last two years, major real estate developer Novaland has been dogged by several legal obstacles in several localities including Ho Chi Minh City, Dong Nai, Ba Ria-Vung Tau, and Binh Thuan.

The problems are yet to be resolved despite support from the government, ministries and localities, experts say.

The $5 billion Aqua City in Subdivision C4 of Dong Nai province’s Bien Hoa town is one of the projects troubled by planning differences.

Subdivision C4 covers about 1,500 hectares, including the entire Long Hung commune and the southwest part of Tam Phuoc ward - Phuoc Hung island.

The investor has many developments in the area including the Long Hung residential area, the Dong Nai Waterfront urban area, the Aqua City urban area and the Phuoc Hung island high-end commercial service urban area.

According to the provincial People’s Committee or the provincial administration, it has approved adjustments to the master plan for Bien Hoa town, capital of the southern province in July 2014; and to the 1,500-hectare Subdivision C4 in September 2016. However, at the time the two plans were approved, detailed planning documents of the 1/500 scale of previously approved projects had not been fully updated.

Due to differences between these plans, several residential and urban area projects, including Novaland’s Aqua City project, had to be suspended.

In May 2023, the provincial People's Committee proposed that the prime minister allow the province to adjust Bien Hoa town’s master plan in order to expeditiously remove difficulties and obstacles faced by several real estate projects, including those developed by Novaland.

Regarding construction and planning violations at Aqua City, Novaland said steps were being taken to fix them in accordance with new plans. The project was also completing related legal procedures to continue construction and business activities towards meeting the approved detailed plan and fully implementing commitments to customers.

In Ho Chi Minh City, Novaland is still waiting for the city's decision to remove the final legal difficulties at the 100 Co Giang apartment project (known as The Grand Manhattan). This project has completed handover of resettlement buildings.

With the 32-hectare The Water Bay and the 136-hectare Thanh My Loi projects in Thu Duc city, the developer has been awaiting for a “conclusion” from the city to remove difficulties in compensation and site clearance so that it can proceed with building the resettlement area and apply for extension of project’s construction deadlines.

For the NovaWorld Phan Thiet project in the south-central province of Binh Thuan, this year, Novaland plans to continue construction and hand over houses on schedule while completing and putting into operation “new utility chains.”

The project has already handed over and put into operation amenities like hotels, golf courses, squares, beach parks, amusement parks, restaurants and cafes.

Meanwhile, NovaWorld Phan Thiet is having difficulty determining land prices. Although Binh Thuan province has repeatedly issued instructions, valuation work has not been completed, stagnating project development progress.

The NovaWorld Ho Tram project in the southern province of Ba Ria-Vung Tau, which has got the go-ahead for building technical infrastructure and works, is facing difficulties in extending its in-principle investment approval and land use period.

According to the group’s leaders, during this difficult period, as they wait for guidance from agencies and departments, Novaland has comprehensively restructured its operations and consolidated its operating model, focusing on core business activities. It has formulated financial solutions and other appropriate options to ensure harmony of interest among relevant parties.

They’ve called for more support from relevant authorities to speed up the removal of legal barriers so that projects can begin operations soon and the group can fulfill its commitments to customers.

Speaking at the firm’s 2024 AGM in April, chairman Bui Thanh Nhon said: “With limited revenue sources, we must prioritize maintaining continuous operations and completing projects to deliver products to customers as committed.”

To date, Novaland has basically completed restructuring of domestic and foreign debts and bonds, he said, adding that the leadership will continue doing its best to quickly solve problems that arise.

Novaland has many plans this year to increase its working capital and complete key unfinished projects like The Grand Manhattan, Aqua City, NovaWorld Phan Thiet and NovaWorld Ho Tram, Nhon said.

Shares of Novaland, listed on the Ho Chi Minh Stock Exchange as NVL, ended up 0.38% at VND13,300 ($0.52) apiece, giving the firm a market cap of VND25.94 trillion ($1.02 billion) on Tuesday.