HCM City is the most important economic center in Vietnam as it accounts for a high proportion and plays an important driving impetus of Vietnam’s economy. The significant socio-economic accomplishments that HCM City gained in 2017 will create a firm foundation for its stronger development in 2018 and the following years and especially for the real estate market because real estate development and the economic growth in Ho Chi Minh City goes hand in hand.
The HCMC’s economic growth and real estate market for 2018
In 2017, the city recorded an 8.25% increase in gross regional domestic product (GRDP), higher than the 8.05% growth in the previous year. The economic structure shifted towards higher proportion of high-quality, high added value and highly competitive services. The export turnover was valued at US$35.2 billion, up 15.1%. Domestic investment, including registered and supplemented capital, reached over VND899 trillion (US$39.5 billion), three fold against 2016, while foreign investment hit US$6.38 billion, doubling the figure of the previous year 1
For 2018, Ho Chi Minh City is destined to reach GRDP growth of between 8.3% and 8.5%. The city focuses on urban and infrastructure development, minimized environmental pollution and will take the initiative in coping with climate change, while making strenuous efforts to control flooding and traffic accidents. Thanks to these efforts, real estate market also expects more dynamic activities and stronger development this year. 2
The latest report of CBRE Vietnam to review HCMC real estate market in Q4-2017 shows that the apartment-for-sale market in the quarter sees an additional supply of 8,559 apartments, up 12% q-o-q, increasing whole-year supply and accumulated supply to 31,106 units and 228,903 units, respectively. It is forecasted that mid-end apartment products in 2018 will continue to occupy a high ratio, while high-class and luxury products will have a humbler volume, creating the foundation for a sustainable market growth. 3
Transport infrastructure booms in the city’s East area
Currently, the eastern part of HCMC is capturing much attention of real estate firms, investors and homebuyers thanks to the rapid transport infrastructure development and a long-term vision of urban planning there.
Between 2012 and 2020, there will be 11 infrastructure projects, small and large, to be implemented in the east. Their combined investment capital is estimated to amount to nearly VND250 trillion, equivalent to 70% of the total cost for road projects across the city.
Several key infrastructure projects in the area have been finished, such as Saigon River Tunnel, Saigon 2 Bridge, Mai Chi Tho Highway and Vo Van Kiet Highway, thereby shortening travel time between districts 1 and 2 to 10-15 minutes. In addition, HCMC – Long Thanh – Dau Giay has traffic at Ring Road 2 intersection, Phu Huu Ward, District 9 on the day 29-8-2014. This connection enables the move from HCM City to Long Thanh is only about 15 minutes.
Besides, many projects are being implemented currently like Metro Line No. 1, which connects the landmark Ben Thanh and Suoi Tien Park in District 9; expansion of Hanoi Highway and Luong Dinh Cua Street; 4 Routes in Thu Thiem Urban, Giong Ong To Bridge, My Thuy Crossroad in District 2 will shape the urban development landscape of the city when it is in place. 4
According to surveys of realty consulting firms GIBC and CBRE conducted, property prices in eastern HCMC have picked up 7-10%, indicating that housing values are rising as more infrastructure projects there are being completed.
Property market is shifting from South to East
Experts said, the focus of development for HCM City’s property market has shifted from south to east last year. According to a report released by property consultant CBRE, 41% of apartment developments were in the east. The figures were 34% for the south, 7% for the north and 11% for the west. In terms of districts, 2 and 9 accounted for 11% each. 5
Many housing projects, both landed properties and condominiums, were developed in this area, which includes districts 2, 9, Thu Duc and a part of Binh Thanh. The area has become a veritable construction site with a raft of developments like Sala, The Sun Avenue, Lakeview City and Cantavil An Phu, etc. A report released recently land prices had shot up in the east last year, increasing by 51% in District 9 and 34% in Thu Duc. 6
Most notably, there are some major projects in Thu Thiem Urban Area, the planned new financial and commercial centre of HCMC: Sala, in December 2014, Dai Quang Minh Corp was given the right to develop an 80-ha of Thu Thiem urban area that includes luxurious residential, office, school and hospital facilities. The estimated cost of development is USD85 million and the project was originally expected to be completed in 2018.
Empire City is a 14.5 ha project located next to the mouth of the Thu Thiem tunnel. It will comprise premium residential apartments, office and retail properties as well as an 86-storey integrated mixed-use tower complex. The planned GFA is 730,000 sq.m with a total investment of USD 1.2 billion. The construction commenced in October 2015 and is expected to complete its four phases in 2022.
Eco Smart City, South Korean conglomerate Lotte and partner (Mitsubishi and Toshiba) have announced the construction of the USD2.2 billion started in July 2016. Covering an area of 16.71 ha, the complex features a luxury trade centre, office buildings, hotels, serviced apartments and multifunctional condos, with a highlight of a 50-storey building.
Moreover, HCMC has lots of other significant projects across the city such as Vinhomes Central Park (Binh Thanh), Golden River City (District 1), Diamond City (District 7), Habor City (District 8) and Centrosa Garden (District 10), etc.
With appearance of many large urban projects, HCM City has recently have a big number of around 10,000 units, a jump of outstanding supply over 2 decades.