As soon as the Japanese firm Riviera/CKS Finance announced its withdrawal from a big hotel project on Pham Hung Road in Hanoi, a pack of domestic investors expressed their readiness to develop the project.
Now that Riviera Group, which beat out South Korea’s Keangnam Group and five other bidders to build the high profile five-star “Lotus Hotel” hotel project two years ago, has finally decided to call it quits, Hanoi City authorities are urgently seeking a new contractor.
Deputy Mayor of Hanoi Phi Thai Binh said that Hanoi is seeking investors capable of starting the hotel project immediately. An investor must meet the requirements on the project set by the city’s authorities, and will inherit all the responsibilities and duties of the original Japanese investor.
The tract that was allocated to the Riviera Group to build the Lotus (or Hoa Sen) Hotel is in the ‘golden land area’ on X2 position on Pham Hung Road near the National Convention Centre. (The city government decided in 2007 after consulting with central authorities that Riviera would develop a hotel on X2 position, while Keangnam would to develop a five star hotel on the E6 land plot in Cau Giay new urban area.)
The Hoa Sen hotel tract is 40,484 square metres. Riviera Group proposed to invest $250 million and was awarded a 50 year lease on the tract.
Replacement investors will have to put down a deposit of 10 percent of the total investment capital to ensure the implementation of the project. The $25 million must be paid within 15 days after the new developers are chosen. Within 30 days, moreover, the new investor is to make a non-refundable grant of $5.5 million to the Hanoi City budget.
The city has refunded Riviera Group’s $5.5 million ‘non-refundable’ deposit.
In a report to the Prime Minister, Hanoi leaders said that as soon as the Japanese investor officially quit the project, the city received proposals from many domestic investors.
One of these, the Kinh Bac Urban Development Corporation, has worked with the Japanese investor to obtain relevant documents. The Vietnam Construction and Import-Export Corporation (Vinaconex) and Hoang Thanh Investment and Infrastructure Development Corporation are also among the would-be investors.
Though Thien Thanh Production Trade and Construction also expressed interest in developing the project, it had not sent documents proving its financial capability to Hanoi authorities by early September 2009.
Both Kinh Bac and Thien Thanh say they are ready to deposit $5.5 million after getting the investment license and pay $25 million right after getting the decision on choosing investors. They also commit to pay 100 percent of the land leasing fee and reimburse the expenses the city has spent on the project.
To date, Hanoi has not made a decision. Whichever new investors are chosen
will have to start the project immediately and complete 20 percent of the work by April 1, 2010.