Ho Chi Minh City, Vietnam’s largest metropolitan area with a total population of nearly 14 million people , is the economic powerhouse of Vietnam, contributing almost one quarter to the country’s GDP. During recent years, Ho Chi Minh City, dearly called Saigon, has witnessed substantial changes in its physical fabric. With government efforts to ease property regulations and improve market access for foreigners, Ho Chi Minh City has now become an attractive destination for real estate investment and development prospects. Recently, “Emerging Trends in Real Estate Asia Pacific 2016”, a report jointly published by the Urban Land Institute and consulting PwC, has ranked the city fifth for investment and fourth for development, behind only after notable cities in the region such as Tokyo, Sydney, Melbourne and Osaka.
For those who have been here 10 years ago and recently returned, Ho Chi Minh City is almost unrecognizable with massive construction projects, new skyscrapers and expanding urban areas. With newly added leisure and commercial spaces, high-quality residences and new traffic infrastructure, the economic growth has transformed what was once a decaying colonial province into a modern mega city.
New Traffic Infrastructure
Walking in the central district of Ho Chi Minh City nowadays, you can observe the construction of the city’s first metro line, connecting the famous Ben Thanh Market, Opera House, Thao Dien (District 2) and Saigon Hi-tech Park (District 9), which was scheduled for completion in 2020. The metro system is expected to resolve the lack of efficient public transport and shorten the travel time from other districts to the city centre by half. According to a recent CBRE report, the metro line is exponentially pushing the land prices around the metro stations up, leading to real estate development boom.
Additionally, the VND336.7 trillion ($16 billion) Long Thanh International Airport project was approved by the National Assembly in 2015 and is expected to reduce the over-capacity of Ho Chi Minh City’s Tan Son Nhat Airport upon completion of the first phase in 2025. The new airport is reported to accommodate up to 100 million passengers and five million tonnes of freight a year. Since the official approval of this project, the land price around Long Thanh area has skyrocketed and property projects near the future airport have edged up 20-30%.
Apart from major transportation developments, Ho Chi Minh City has made considerable efforts to improve its urban infrastructure and solve the worsening traffic jam issues caused by ongoing construction sites within the city. The new VND242 billion ($10.6 million) bridge connecting Truong Son Street and Tan Son Nhat Airport is forecasted to ease the heavy traffic around airport area. Moreover, with the booming development in District 2, the Thu Thiem 3 Bridge was also designed to connect District 2 and District 4.
Watch a Virtual Tour of Metro Line 1 Stations
In recent years, there have been multiple renovation projects to improve the city’s ecology and to serve citizens’ recreation needs. After years of being badly polluted, The Nhieu Loc – Thi Nghe Canal, which runs for around eight kilometres, was cleaned up in 2014 through a World Bank-funded project; followed by the upcoming VND123 billion (approximately $5.5. million) Xuyen Tam Canal renovation project funded by Japan International Cooperation Agency loans.
The vast amount of infrastructure spending is necessary to catch up with Vietnam’s more developed neighbours such as Malaysia and Thailand and compete as a premier investment destination in Southeast Asia. With an average spending of 5.7 percent of GDP, Vietnam is far ahead of its regional peers who earmarked less than two per cent for infrastructure investments, according to the Asian Development Bank (ADB). The ADB estimates that Vietnam requires $480 billion in investment capital by 2020 to realize already planned infrastructure projects across the country.
The foresight in public infrastructure planning across Ho Chi Minh City has accelerate the city’s appeal as an investment destination. If you compare HCMC to Jakarta, Manila or even Bangkok today, you will find a city that does not succumb to traffic jams during every rush hour. Instead most visitors are surprised that – albeit the perceived chaos on the roads – everything works just fine.
This is encouraging more and more international property investors to focus their investments in the city.
New high-end residential projects
In recent years, Ho Chi Minh City has seen an increasing number of high-profile commercial and residential real estate developments, especially around the popular districts such as D1, D2, D3 and Binh Thanh.
District 1 is considered the Central Business District (CBD) and rapidly becoming the premier choice for luxury residences in HCMC. Scarcity of freehold land for development has kept the availability of D1 apartments for sale at a tiny number of those in other areas. Moreover, until recently these were located in old buildings that have seen the best of days many years past.
In 2016, the first residential luxury project, namely Vinhomes Golden River was launched and has seen tremendous success in terms of sales to both, local and foreign investors. The project is located on the site of the historical Bason Shipyard and will always remain the only master-planned riverfront community in the city-centre. With price starting from USD$4,500 per square meter, buy-to-let apartments will generate attractive yields of around 7-9 % per annum when completed and are promising exponential capital appreciation over the next ten years. This makes the project the perfect choice for foreign investors and expats living and working in Ho Chi Minh City which is clear from the fact that the foreign ownership quota of 30% is almost exhausted.
D1mension is the first internationally branded residence available for sale in District 1. Once operational, the property will be managed The Ascott Limited, one of the world’s leading operators of serviced apartments and marks the map with its luxurious positioning in Ho Chi Minh City’s real estate market. Developed by reputable Singapore-listed property developer, CapitaLand, this artfully designed project is positioned as a lifestyle product with exceptional facilities such as the glass-bottomed sky infinity pool overlooking the panoramic city skyline.
Before the year-end, District 1 is expected to see the launch of a considerate number of boutique luxury developments, both branded and unbranded, but with an array of extraordinary facilities, exclusive resident amenities as well as sophisticated design and architecture. Price levels are rapidly edging towards the US$6,000 per square meter mark which is still far below competing regional cities such as Bangkok or Kuala Lumpur.
Binh Thanh District
Just 5 minutes from the CBD lies City Garden, the distinct ellipse-shaped design apartment complex offering resort-style facilities. The project stands out amongst the countless high-rise buildings in the area with its signature full-height windows and 360 degree views of Ho Chi Minh City.
Close to City Garden is the new tallest tower in Southeast Asia, the 461.2-metre high Landmark 81, which is eclipsing the Petronas Towers in Kualar Lumpur by 20 centimetres. The Landmark 81 is a part of $1.5 billion high-end and multi-functional development Vinhomes Central Park, featuring high-end apartments, a hotel, executive floors and 360 observatory decks. This skyscraper is well set to be the next signature building of Ho Chi Minh City apart from the existing Bitexco Financial Tower.
About 20-minute drive northeast of Ho Chi Minh City centre is District 2, the most popular residential area with luxurious villas and apartments, various international schools, neighbourhood stores and fancy restaurants, attracting wealthy Western expats and the affluent Vietnamese community. With the development of metro line no.1 running along the main Hanoi Highway, District 2 has rapidly transformed itself from one of the poorest parts of the city to a well-planned new urban area. All eyes are on District 2 projects with D’Edge, Nassim, Gateway Thao Dien and Empire City leading the high-end segment.
D’Edge, previously named Sensation, is a new development from Singaporean developer CapitaLand, comprises of three 25-storey towers and is managed by Ascott Limited. D’Edge features a winding sky reflecting pool and contemporary architecture offering a quintessential mix of tranquillity and luxury. This riverfront project is in the heart of Thao Dien, within walking distance to British International School, international hospitals, The Oxygen shopping centre, contemporary art centre and fine dining restaurants.
One of the most successful projects in Thao Dien, the prime area of District 2 is The Nassim, developed by award-winning luxury developer Son Kim Land and Hong Kong Land. The Nassim comprises of 4 towers with 238 units and was awarded “Best Luxury Condo” and “Best Condo Development” from Vietnam Property Awards in 2016. Closer to Thu Thiem Tunnel and the future Thu Thiem 3 Bridge is the riverfront project Empire City, jointly developed by Singaporean developers Keppel Land, Tien Phuoc, Gaw Capital and Tran Thai Group. With ultimate proximity to the current CBD and located in the new financial centre Thu Thiem – also referred as the new Pudong of Ho Chi Minh City, Empire City is promising to “redefine the modern living” in the city.
District 3, an area well-known in the international community as the location of most government offices and consulates, features another exciting luxury project from Son Kim Land. Serenity Sky Villas are the first project to introduce true luxury living in Vietnam. This community is a low-rise boutique residence of only 45 sky villas, offering utmost privacy and exclusivity to its owners. Serenity is promised to set a new benchmark of luxury properties with artful design and architecture and ample living space in the most affluent and serene neighbourhood of Ho Chi Minh City.
Ho Chi Minh City is a relatively young property market and the demand for high quality real estate here is continuing to expand. However, due to limited land supplies in the CBD, investors are starting to look into the future urban areas such as Binh Thanh and District 2. With new traffic infrastructure, especially metro system, the travel time from the overcrowded CBD to the upcoming urban areas such as Binh Thanh District and District 2 will be reduced tremendously, which fuelled the property market in such areas.
Ho Chi Minh City, once called “Pearl of the Far East”, is now transforming into one of the fastest growing and most exciting cities in the region, catching up with Bangkok, Kuala Lumpur and attracting investors from neighbouring region. With the government effort and vision to reclaim Ho Chi Minh City’s former glory as one of the economic centres in Asia and with its own potential, the city is well set to become a unique economic zone in the future.
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