Vietnam - Tourism real estate developers fall into dilemma

VietNamNet Bridge – The investors in the tourism real estate sector, who thought to be unhurt by the gloomy real estate market, have also tasted the bitterness of the economic crisis.

Real estate investors once rushed to pour money into tourism projects, believing that the “early bird can catch the worm.” The investors who come late, would not be able to find the “golden land plots” on advantageous positions, which is a very important factor that makes a project successful.

However, the investors have been put into dilemma. They cannot arrange capital to continue the projects in the current context of the economic downturn. Meanwhile, even if they can seek capital for the projects,, they are not sure if the works can be put into operation to bring profits in such conditions.

The information that the father of Michael Jackson has announced his decision to quit the two billion dollar Happyland project has stirred up the media. Kicked off on February 14, 2011, the project has become well known to everyone in Vietnam and abroad because of its big scale.

The latest information released by Khang Thong Group showed that the investor is gathering the strength to develop the project, hoping to put the 50-hectare Vietnamese culture area into operation prior to the 2013 Tet. However, this is just one of the 150 items of the Happyland complex.

Local newspapers have reported that 60 percent of the works of the item have been fulfilled. Another item, a balloon with the expected diameter of 20 meters capitalized at over one million dollars has been well inflated, which would be into operation soon.

The works on the 3.7 kilometer embankment adjacent to the Vam Co Tay River, which costs tens of billions of dong, is also nearly completing.

However, the construction of a lot of other important items of Happyland, including the five star hotel, shopping area, or cinema has not been started yet.

The main reason behind the slow project implementation is that the investor still cannot arrange capital.

Lacking capital is also the problem that many other tourism real estate developers are facing.

In 2007, the Tan Tao Group (ITA) got the license to build a film studio Vina Universal with the capital of 50 million dollars. The investor hopes to set up a big complex of shopping mall, service center and film studio, covering a total area of 2600 hectares in Quang Ngai province.

However, four years later, in 2011, ITA stated that it would give up the project because it could not mobilize capital for the project.

In June 2010, Tran Kim Chung, President of CT Group, announced the investment in the Vinh Loc Park in Binh Chanh district in HCM City with the estimated investment capital of one billion dollars.

However, the investor has not taken any further move so far, because the local authorities have not allocated land. However, people believe that the real reason behind this is the lack of capital.

As for Happyland project, in order to mobilize capital for implementing the other items slated for the first phase of the project, Khang Thong would have to call for foreign investment.

According to Nguyen Huu Viet, Deputy General Director of Happyland Media, a subsidiary of Khang Thong Group, said three investors from South Korea, Japan and Sweden have expressed their interest in the project. The foreign partners are negotiating the capital contribution to the five-star 1000-room hotel, an item of the project.

Viet also said that Tran Group, owned by a Viet Kieu in the US, has also shown its interest in Happyland.

As such, lacking capital has hindered the investors to develop their projects. However, analysts believe that even if they can mobilize capital, they would be facing big difficulties when putting the projects into operation.

Thibault Paquin, President of the US based Celebrating Life, specializing in designing modern leisure parks, said though the model is very popular in the US and some Asian countries still cannot develop well in Vietnam.

“Vietnamese people would have to wait some more years to have money to pay 50-100 dollars for the admission tickets,” he said, adding that 90 percent of the leisure parks in China are taking loss, which should be a lesson for Vietnamese investors.

Compiled by C. V

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