A plan to build the Phan Dinh Phung Sports Center in District 3, Ho Chi Minh City has been in place since 2010, when the prime minister approved the appointment of a local consortium as project developers.

The initially approved investment capital was VND988 billion ($43.16 million), which the city would pay for by awarding the developers a plot of land at number 257 Tran Hung Dao Street in downtown District 1.

The practice is known as BT (build-operate) scheme, whereby authorities allow developers to use public land in exchange for infrastructure development.

A sports service center is located at number 3-3bis Phan Van Dat Street in District 1, Ho Chi Minh City. Photo: Tuoi Tre

In 2013, a new design plan for the sports center was approved, raising the estimated cost of construction to over VND1,352 billion ($59.06 million), which did not include costs to purchase sporting equipments.

In a 2016 feasibility study report approved by the city’s administration, the total development cost for Phan Dinh Phung Sports Center was once again raised to nearly VND1,954 billion ($85.36 million), almost twice as much as initial estimates.

Elaborating on the cost hike, the municipal sports department said the new design plan featured larger and more complex construction items.

“The city wants a modern sports center capable of hosting national and regional events and projecting an image of a modern and dynamic city that places emphasis on social welfare,” a sports official in Ho Chi Minh City told Tuoi Tre (Youth) newspaper.

The sports center was also intended to be a key venue for Ho Chi Minh City’s bid to host the 2021 Southeast Asian Games, before Hanoi took over the baton.

Ongoing construction for the Phan Dinh Phung Sports Center in District 3, Ho Chi Minh City. Photo: Tuoi Tre

In early 2018, the city’s administration approved the appointment of Phat Dat Real Estate Corporation as a developer for the multimillion-dollar project, replacing An Tao Ltd. in the two-member consortium.

The other member is a land clearance and compensation arm of Duc Khai Corporation, an enterprise specializing in real estate and logistics.

After doubling the project’s investment capital, the city early this month proposed adding two other plots of land as payment for the consortium.

The first one is located at number 3-3bis Phan Van Dat Street in District 1, while the second one is a three-hectare space inside the disused Phu Tho Horse Racing Ground in District 11.

The proposal is still waiting for prime minister approval.

The plot of land at number 257 Tran Hung Dao Street in District 1, Ho Chi Minh City is currently occupied by a sports club. Photo: Tuoi Tre

The three land slots are considered by real estate experts to be highly valuable thanks to their prime location, with the combined market value estimated to be around VND4 trillion ($175 million).

This means the city is offering to pay project developers more than twice as much as how much it costs to actually build the lavish sports center.

The city has said the consortium would have to pay the city back in money for any difference in the land plots’ value and the project’s actual development costs.

However, public policy expert Nguyen Quang Dong asserted that if that was the case, the city would be better off just auctioning the public estates and pay the developers in cash.

“It’s more time-consuming, of course, but it can ensure transparency,” Dong said

“In reality, the valuation of any piece of land only gives you the floor price of the estate, while its market value can be much higher thanks to its profitability,” he explained.

A three-hectare plot of land inside the disused Phu Tho horse Racing Ground in District 11, Ho Chi Minh City is seen in this aerial photo. Photo: Tuoi Tre

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