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Banks increase foreclosures on mortgaged properties to collect debt

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As investors have fallen into insolvency, many large properties have been distrained by commercial banks and put up for sale. HOREA estimates that about 500 projects have become ‘clinically dead’.

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The real estate market is warming up

 

Under National Assembly’s Resolution 42, commercial banks have the right to distrain debtors’ mortgaged assets and sell assets to collect debts. Soon after the green light was turned on, a large number of real estate assets worth trillions of dong were put up sale by banks and VAMC (Vietnam Asset Management Company).

In late August, VAMC seized Sai Gon One Tower in HCMC as the project developer failed to pay off its debts of VND7 trillion ($308 million), thus starting the ‘foreclosure wave’. 

Located in an advantageous position in the central area of HCMC, the construction of Sai Gon One Tower came to a standstill in 2011, with 80 percent of construction works completed.

The real estate project was mortgaged by borrowers for loans from Maritime Bank and Dong A Bank. As the debts have been transferred to VAMC, the company has the right to deal with the assets.

Meanwhile, Agribank AMC has announced the auction of V-Ikon, the office building on Dien Bien Phu in Binh Thanh district still under construction. The project developer – Viet Thuan Thanh Company – has fallen into financial problems and cannot pay debts.

Another large project – Happyland – developed by Phu An Infrastructure Development was also seized to settle debt worth trillions of dong.

The 584 Tan Kien apartment project was put up for sale to get money to pay the VND1.1 trillion debt the developer owes BIDV. 

Agribank has offered the sale of Van Hung Phat project, a 21-storey apartment block which has been idle for seven years, with the starting price of VND63 billion. Kicked off in August 2010, the building has a foundation but nothing else. 

Who will buy the assets?

Of the real estate assets offered for sale, only CT2-105 Usilk City in Ha Dong district in Hanoi has been sold. The buyer is Hai Phat Thu Do JSC. 

As for Sai Gon One Tower, the project still cannot be auctioned because it is located on land leased by the state every year and is difficult to valuate. A source said the valuation won’t be completed prior to the end of January 2018.

V-Ikon has been put into auction five times and the starting price has been lowered by VND75 billion, but it still cannot attract buyers.

As for the 584 Tan Kien project, the starting price set by BIDV is VND810 billion. The bank has accepted to sell it at a loss of VND300 billion to settle the bad debt.

US$1=VND22,000

 

 

Source: VietNamNet

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