Ho Chi Minh City’s two major underground parking lots still face delays as developers and relevant state agencies are hectares apart.
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Deputy general director Nguyen Thi Bao Quynh at Indochina Group - developer of Trong Dong outdoor stage and Hoa Lu stadium underground parking projects, said the company stepped into surveying the first underground parking project seven years ago.
But, legal documents have stone-walled the projects.
In respect to land rental rates for space proposed for underground parking development Quynh said: “The cost of building underground works is often four to five times more than common ones. We want the rent to be set based on rental rates announced by city authorities every year.”
Besides, also underground parking projects are categorised as property projects subject to restricted lending.
“During 2007-2008, our company got loans from three banks and one financial fund with a 12 per cent, per year interest rate. Recently, one financial fund refused to lend to us saying underground parking investment ventures could hardly generate profits,” said Quynh.
Le Tuan, CEO of the Investment Development for Underground Space Corp (IUS) - the developer of Le Van Tam Park underground parking project, said cheap parking fees kept investors away from underground parking projects.
Tuan argued the state regulated fees at VND5,000-10,000 per car in available parking infrastructure, but investors of underground parking lots faced much greater capital expenditure.
The investor would need around $2,000 investment for each square metre of underground parking space, assuming each car covers 22-25sqm, so the investment ratio for one car would be around $50,000, according to IUS estimates.
“It would take us 120 years to recover investment capital for our proposed $110 million Le Van Tam Park underground parking lot,” said Tuan.
Tuan then asked the city authorities for a 3 per cent interest rate subsidy for more than 70 per cent of IUS loans for investing in the project.
“Hanoi authorities regulated new fee levels at VND30,000-40,000 per car from January 1, 2012, an incentive to investors against current VND5,000 per car in Ho Chi Minh City which is an unrealistic level as actual fees are often higher,” said Quynh.
“Ho Chi Minh City Transport Department is joining hands with relevant state agencies to work on supportive policies in this field. These proposals will be submitted to the city authorities in April 2012,” said the department’s deputy director Bui Xuan Cuong.