Vietnam’s Tan Hoang Minh Group has announced its decision to withdraw from a land purchase contract after winning the bid to buy a 10,000-square-meter land lot in Ho Chi Minh City’s Thu Thiem New Urban Area at a record price of over US$1 billion last month.

The decision was mentioned in a letter sent by Tan Hoang Minh Group chairman Do Anh Dung to leaders of the Party, the state, the government, and the Ho Chi Minh City People’s Committee on Monday.

Dung said Tan Hoang Minh had decided to unilaterally terminate the auction contract and will accept all sanctions in accordance with the law.

On December 10, the city’s Property Auction Service Center announced that land lot No. 3-12, which covers an area of 10,059.7 square meters at Thu Thiem New Urban Area, had been sold to Ngoi Sao Viet Real Estate Company, a subsidiary of Tan Hoang Minh Group, at VND24.5 trillion ($1.07 billion), equivalent to VND2.4 billion per square meter.

The starting price of the land was more than VND2.9 trillion ($127.7 million).

The second highest bidder was a foreign company, which offered VND23.8 trillion ($1.04 billion).

Chairman Dung said Tan Hoang Minh bought the land plot at such a high price as it wished to contribute to the city’s budget and help the metropolis recover after serious COVID-19 outbreaks.

According to auction regulations, Tan Hoang Minh will lose its deposit of nearly VND600 billion ($26.4 million) if it terminates the contract, and the land lot will be sold to the company with the second highest offer if it still wants to make the purchase.

In an official announcement, Tan Hoang Minh Group said it had considered the opinions from state management agencies and the public after winning the auction.

The group agreed that buying the land lot at such a hefty rate would cause serious consequences for the real estate sector and the economy in general, implying that the prices of land in the vicinity would skyrocket as a result.

After winning the auction, Tan Hoang Minh has adjusted its investment, business, and financial plans, and found that its profit will be lower than previously expected.

Ngoi Sao Viet Company will send an official document on this decision to the Ho Chi Minh City People’s Committee.

The firm will also inform the Property Auction Service Center about the termination of the auction contract.

Founded in 1993, Tan Hoang Minh Group specializes in various fields including real estate, financial investment, building materials, and furniture, among others, according to its website.

Spanning over 6km², Thu Thiem New Urban Area is a redevelopment project abuilding in Thu Duc City under Ho Chi Minh City.

Once completed, it is meant to replace District 1 as the city center with massive residence, shopping, financial, park, and office developments.

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