The Hanoi Planning and Investment Department has decided to name Kinh Bac Urban Development Company as the developer of the Hoa Sen (Lotus) five star hotel in Hanoi which is expected to have a total investment capital of $500 million.

Kinh Bac Company is now the only candidate for the post for the project after the Vietnam Construction Import - Export Corporation (Vinaconex) and Thien Thanh Production, Trade and Construction officially announced their withdrawal.

Once operational, the hotel will be the largest in Hanoi and will cover an area of 4.3 hectares and have 550 luxury rooms. The hotel will be located in the ‘golden land area’ on Pham Hung Road near the National Convention Centre which is considered the most advantageous position for a hotel in Hanoi and boasts the highest price level in the city.

Initially, before Vinaconex, Thien Thanh and Kinh Bac entered the race, the project was allocated to the Japanese Riviera Group.

However, Riviera Group, which initially beat South Korea’s Keangnam Group and five other bidders to build the hotel project two years ago, withdrew due to financial difficulties. This has forced Hanoi authorities to seek other investors urgently.

The chosen investor will have to start immediately and complete 20 percent of the work by April 1, 2010.

As per request by the Hanoi authorities, the investor must prove its financial capability. This means that Kinh Bac has to pay 10 percent of the total investment capital ($25 million) within 15 days since the day of receiving the investment license. It also has to pay $5.5 million into Hanoi’s local budget as non-refundable aid.

Kinh Bac said it has worked with the Japanese investor, Riviera, to obtain the relevant documents

Hanoi authorities now want it started as soon as possible, because it is listed among projects for completion to mark the1000th anniversary of Thang Long-Hanoi next year.

The news has meant Kinh Bac’s shares increased sharply. Prices have risen by 1,200 dong per share to 77,000 dong per share yesterday.