Prolonged land valuation procedures are becoming an important factor affecting the implementation timeline and actual operating period of some real estate projects. In certain cases, businesses have already received decisions on land allocation or leasing but must wait years to complete their financial obligations, significantly reducing the remaining time available to develop and operate their projects.
Land Allocated but Project Implementation Stalled
A real estate developer executive in the Eastern area of Ho Chi Minh City stated that more than a decade ago, the company leased land from the State with a 50-year term to develop a commercial and service project.
However, the project has yet to be fully implemented to date because the procedures for determining the land rental rate have not been completed.
According to the developer, without a determined land price, they cannot fulfill their financial obligations to proceed with subsequent legal and investment steps. Meanwhile, the land lease term continues to count down, resulting in an increasingly shorter actual operational period for the project.
Beyond affecting the schedule, this waiting period creates additional financial pressure. For many years while the project cannot generate revenue, the company must still maintain its operations, manage assets, execute related tasks, and bear capital costs.
Once the procedures are finalized, the developer may have to adjust their entire financial plan as the remaining operational period no longer aligns with the initial schedule.
The Gap Between the Land Lease Term and Actual Operational Period
One of the issues raised by enterprises relates to the method of determining the land use term and the timeframe for fulfilling financial obligations.
Under the 2024 Land Law, the land use term for many investment projects typically does not exceed 50 years; in certain cases, it can extend up to 70 years. This term is calculated from the date the land lease decision is issued.
Meanwhile, for projects requiring a specific land valuation as a basis for calculating land use fees or land rental fees, developers must wait for the valuation process to conclude before they can fully meet their financial obligations and implement subsequent steps.
The law stipulates that a land pricing decision must be issued within 180 days from the valuation date. However, in practice, for some projects, the process of determining, appraising, and approving land prices can be significantly prolonged.
Consequently, the land lease term has already commenced, while the project cannot be operated or commercialized according to the investment plan.
Developers May Only Have 30-40 Years of Operation Left
Mr. Le Hoang Chau, President of the Ho Chi Minh City Real Estate Association (HoREA), stated that this is one of the reasons why some companies are leased land for 50 years, but upon completing financial obligations and meeting the conditions to deploy the project, their actual operational time is reduced to only 30-40 years.
Meanwhile, financial obligations and related requirements must still be fulfilled as stipulated for the allocated lease term.
According to Mr. Chau, a notable underlying cause in the past was that the specific land valuation process using the residual method was relatively complex. This could prolong the time required for data collection, plan formulation, appraisal, and approval of valuation results.
Capital Costs Continue to Rise During the Waiting Period
From a financial perspective, expert Truong Quoc Thang noted that delays in land valuation not only impact schedules but also inflate the investment costs for enterprises.
To prepare for and deploy a project, developers typically utilize their equity or mobilize capital from credit institutions. When a project cannot be implemented and generates no revenue, interest expenses continue to accrue.
Additionally, there are expenses for administration, maintaining organizational operations, security, asset management, and various other related costs.
These outlays may fall outside initial budget estimates and significantly alter the project's financial efficiency. As total costs rise, developers may be forced to revise their investment plans, where the selling price or rental rate could likely be reconsidered to offset the costs.
In the long term, if this situation occurs on a broad scale, rising development costs could exert additional upward pressure on overall real estate price levels.
Several Projects Have Waited Years for Land Valuation
Delays in completing land pricing procedures have been recorded across several projects in Ho Chi Minh City.
For example, a project in the Thu Thiem New Urban Area was allocated land in 2017, but a land pricing decision was only issued in 2025. This waiting period severely prolonged the project's implementation schedule, while the developer had to continually bear associated costs.
Another case is IFC One Saigon, formerly known as Saigon One Tower. When the project was put up for auction by the Vietnam Asset Management Company (VAMC), the remaining land use term was approximately 39 years instead of the full 50 years.
A remaining operational period shorter than the initial term can directly impact the project's commercial value and financial plan.
Proposals to Reduce the Number of Cases Requiring Specific Land Valuation
Given these bottlenecks, experts argue that improving the land valuation process is a crucial factor in shortening project preparation and implementation timelines.
According to the direction outlined in the drafted amendments to the Land Law, expanding the application of land price frameworks and adjustment coefficients could help reduce the number of cases requiring a specific land valuation.
Pending the new regulations, some experts have proposed that Ho Chi Minh City promptly review and adjust Decision 45 to align with the National Assembly's Resolution 254, thereby shortening the time required to determine financial obligations related to land.
The objective is to help developers fulfill their financial obligations early, facilitating the transition of projects into subsequent deployment phases rather than enduring prolonged waiting periods.
Should the Operational Period Be Recalculated for Projects Delayed by Administrative Procedures?
Another proposal suggests that for projects with fully completed documentation but stalled due to the state management agencies' processing, a suitable mechanism should be considered so that procedural delays are not deducted from the project's operational term.
If reasonably applied, this mechanism could help developers retain an operational period commensurate with their initial investment plans, while mitigating incurred costs that do not stem from the developer's execution capacity.
On a broader scale, reducing the time required for land valuation not only resolves difficulties for individual projects but also contributes to improving land use efficiency, lowering capital costs, and fostering a more transparent and stable investment environment for the real estate market.