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Land prices soar in HCM City’s neighboring provinces

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While the HCM City market has remained quiet since the Covid-19 outbreak, land prices have been increasing in the neighboring markets of Dong Nai, Long An and Binh Duong.

A recent report of the Vietnam Association of Realtors (VARS) said the development of Long Thanh International Airport in Dong Nai and the development of Thu Duc City, plus new roads and bridges connecting the southeastern provinces region with HCM City, have led to increased activity in the real estate market.

Land prices soar in HCM City's neighboring provinces

In Binh Duong province, the cities adjacent to HCM City which have potential for economic development such as Thuan An and Di An have become lucrative land for realtors to develop affordable apartment projects. This is a product HCM City lacks.

VARS reports that the apartment prices in Binh Duong increased sharply in 2020, despite Covid-19, from VND25-30 million per square meter to VND30-35 million, or 15 percent.

In Dong Nai province, contiguous to the eastern part of HCM City, also has seen land prices escalating, especially thanks to the development of the Long Thanh Airport.

In 2019, the average land price hovered around VND12-14 million per square meter, while it rose to VND22 million in 2020. In Long Thanh Town, the prices in some areas have surged to VND100 million per square meter.

The real estate market in Ba Ria – Vung Tau province is also hot as it is adjacent to HCM City and has great potential to develop tourism.

After a lot of ups and downs, the market has become stable. Thanks to effective management by local authorities, the land prices there have been stable, now hovering around VND10 million per square meter.

Can Tho, which is further from HCM City than other markets, was quiet in the first half of 2020 but was unexpectedly busy in late July when the outbreak was controlled.

The projects are well invested, with good infrastructure conditions and sufficient legal status (land use right certificate), and have been selling well.

In Binh Duong province, the cities adjacent to HCM City which have potential for economic development such as Thuan An and Di An have become lucrative land for realtors to develop affordable apartment projects. This is a product HCM City lacks.

It is estimated that about 500 land products have been marketed.

The projects near the central area of the city and near big roads are priced at VND40-60 million per square meter. Meanwhile, other projects are selling at VND19-30 million per square meter, a 7 percent increase compared with 2019.

Investors also are paying special attention to projects in Long An, which is also contiguous to HCM City. However, because of Covid-19, the sale is slow, just 20 percent. Some projects with high potential can be sold at VND21-26 million per square meter. Other areas have land prices of VND13-15 million per square meter.

The products of projects launched recently in Long An show that the lowest price is VND15-20 million per square meter.

The prices of over VND20 million are seen in some projects in Nhon Trach area of Dong Nai.

In Long Thanh, where the construction of Long Thanh Airport has kicked off, the prices have escalated to VND20-35 million per square meter.

In Phu My of Ba Ria – Vung Tau, the land prices are over VND 10 million.

According to VARS, the land prices in many suburban districts have increased because of information that the districts will develop into inner city’s districts. The transparent urban area development planning also makes the areas more attractive to investors.

The association noted that investors have appeared in rural areas, which has pushed up land prices there. In some areas, the prices have soared from hundreds of thousands of dong per square meter some years ago to several million of dong.

In HCM City, because of short supply in the context of high demand, the apartment prices have surged rapidly. Because of the short supply of project products, investors are seeking to buy land in the suburbs, pushing prices up in the districts of Binh Chanh, Go Vap and Cu Chi.

Experts say the suburban market is getting hot because of the limited supply in HCM City. The better conditions of infrastructure conditions in many districts of HCM City have also helped the prices in neighboring areas increase.

The HCM City Real Estate Association also commented that investors are flocking to the suburbs and neighboring areas of HCM City because land in the central area is getting exhausted.

Investing in the suburban market is not a bad choice nowadays, as the infrastructure system has been improved.

Pham Ngoc Thien Thanh from CBRE Vietnam noted a lot of large-scale projects have been implemented in Long Thanh district, and 90 percent of buyers in the area are from HCM City.

However, experts warn that the speculation may lead to price fever similar to what happened in districts 9 and Binh Chanh.

DKRA Vietnam has predicted that the new supply and demand for land may recover and increase in 2021, mostly in Long An, Dong Nai, Binh Duong and Ba Ria – Vung Tau. Land continues to be the top choice for investors this year. 

Ho Van

Source: https://vietnamnet.vn/en/feature/land-prices-soar-in-hcm-city-s-neighboring-provinces-706762.html

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Stability sought for Thu Duc City prices

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The just-established Thu Duc City is already witnessing skyrocketing property prices, with hikes of around 30 per cent reminding local authorities of the need for special policies to manage the market.

Stability sought for Thu Duc City prices
Property prices have been spiralling out of control since the establishment of Thu Duc City. Photo: Le Toan/ VIR

Nguyen Minh Tuan, a resident in Phuoc Long Commune of the former District 9, was interested in a land plot in Dong Tang Long New Residential Area. However, this plot’s price has increased by more than 40 per cent compared to mid-2019 when Thu Duc City was yet in the pipeline.

“The prices in this area have increased a lot; however, local landlords still predict that the prices will even further increase towards the end of the year. That is why buyers will certainly make a profit if they buy land plots right now,” Tuan told VIR.

Prices in the area could sit anywhere at VND30-40 million ($1,300-1,750) per square metre depending on the location in 2019, but are now usually around VND50-70 million ($2,200-3,000) per sq.m.

In Tam Da Street in the former District 9, a 50-sq.m land plot is now quoted at $3,000 against the $1,750 at the end of 2020.

This January, when Thu Duc City was officially established on an area spanning across the old districts 2, 9, and Thu Duc, apartment prices at the King Crown Infinity – a project developed by BCG Land located – soared to over VND95 million ($4,100) per sq.m – the highest valuation ever for an apartment in the area.

A general trend of appreciation was also observed in land plots and houses in the area of the former District 9 with outstanding increases of 20-30 per cent compared to mid-2020.

The most buoyant area was Truong Tho Commune, the centre of Thu Duc City, where property prices are quoted at more than VND160 million ($7,000) per sq.m.

This 500-hectare area is close to major transport facilities such as Metro line No.1 and Hanoi Expressway, and is planned to become a new residential area.

According to Nguyen Huong, general director of Dai Phuc Land, the price increases in areas with good planning and improved infrastructure are nothing extraordinary. Mirae Asset Securities also ascribed the recent surge in Thu Duc’s prices to the continuous infrastructure developments.

Of the total VND350 trillion ($15.2 billion) spent on infrastructure in Ho Chi Minh City since 2010, as much as 70 per cent has gone into what is now called Thu Duc city.

“These price hikes take into consideration the market’s expectations for the future of the area in the next 10 or even 20 years,” Huong said.

Concerns rising 

Skyrocketing real estate prices steadily exceeding realistic valuations are concerning interested parties, and could cause untenable development trends in the newly established city.

Huong from Dai Phuc Land also warned of realtors or brokerage agencies that are potentially driving prices higher to increase profits on properties in the area.

“Buyers must carefully consider all aspects of a project, including location, nearby infrastructure, facilities, and construction progress,” Huong added.

Right after official establishment of Thu Duc City, Ho Chi Minh City Party Secretary Nguyen Van Nen warned of prices spiralling out of control, requesting local authorities to halt all brokerage activities which could destabilise the market.

The party secretary also suggested increasing the proportion of affordable and social housing, as well as publishing information related to housing projects so that buyers can make fully informed decisions.

According to Ho Chi Minh City People’s Committee, Thu Duc City will be developed in three phases. The first lasts from 2020 to 2022 with the target of creating land funds and setting up usage plans, while the second phase to 2030 will see the approval of projects in transport improvement, digital infrastructure, and urban design. Developers will implement projects based on these plans from 2030 to 2040 in the final phase.

According to Phan Cong Chanh, a freelance real estate consultant, the formation of the city will take a long time, during which urban planning might change and adjustments could take place.

“Therefore, if land prices rise too quickly, they could pose many risks for investors and disrupt capital mobilisation for projects in the area,” Chanh said. “Buyers and sellers are all very excited. However, land prices in different areas could be subject to different dynamics and could even decrease with time, depending on factors like planning.”

In addition, climbing land prices would also make it difficult to attract investments in Thu Duc City later by affecting business plans and reducing profitability for those buying for investment purposes.

According to Colliers International, more than 40,000 apartment units will be finished and handed over to customers in Ho Chi Minh City in the next year. Of these, Thu Duc occupies roughly 76 per cent, positioned mainly in the mid- and high-end apartment segments.

Special polices required 

Thu Duc City, according to experts, should enjoy its specific jurisdiction to better implement Ho Chi Minh City’s specific mechanisms, with the new administrative unit set to be more active and innovative to fulfil the assigned establishment goals.

“Since a merger of small administrative units into a larger one means a jurisdiction upgrade, it is nonsensical for such a city with over one million residents and a surface area of more than 210 square kilometres to merely have the same jurisdiction as District 4 with 200,000 residents on an area of 4.2 sq.km,” said major General Phan Anh Minh, former deputy director of Ho Chi Minh City Police Department.

“The new jurisdiction should allow Thu Duc city to implement special policies, preferential methods, and to simplify business forming procedures to create a friendlier environment for startup activities and the innovative economy. This could, in turn, transform the city into the startup centre of the whole country,” Minh said.

Proper policies for financial promotion and tax exemption could also be considered to boost the growth of high-tech and scientific parks and automatic manufacturing centres.

“The customs-related procedures should be simplified to better exploit the strengths of Cat Lai Port. The use of traffic facilities, infrastructure, and land should be boosted to build an innovative centre inside Thu Duc City,” Minh added.  VIR

Kevin Hawkins – Partner, DFDL

 
The establishment of a city within a city is an unprecedented development in Vietnam. Long-term advantages can be achieved through improvements in digital governance, sustainability, and infrastructure, as well as through the creation of opportunities in investment and real estate. Enabling the local population and businesses to reap such anticipated benefits is of paramount importance.

Notably, the accumulation of financial, educational, and alternative energy high-tech hubs along with the existence of industrial parks in neighbouring areas creates favourable conditions towards sustainable development and the provision of state-of-the-art services and products. This could create an innovative ecosystem capable of attracting top talents, enhancing professional and educational opportunities for local youth, and supporting Vietnam’s Industry 4.0 ambitions.

Peter Hong – General secretary, Association of Vietnamese Entrepreneurs Abroad

Every year overseas Vietnamese send more than $5 billion of remittances to Ho Chi Minh City, and this is a remarkable financial source for it to invest in its development. Many overseas Vietnamese are keen on contributing to the country, but they do not know how to do it in detail. The city authorities can appeal to these businesspeople to invest in infrastructure and projects.

Transforming Thu Duc into a successful urban project is not just a matter of vision, planning, and district merging but also of an appropriate implementation roadmap and specific mechanisms in socioeconomic management, urban areas, and investment attraction.

With such an implementation strategy, it is necessary to determine the overall investment infrastructure and calculate total capital needs. From there, the plans to mobilise investment capital for each project should be determined.

VIR

Source: https://vietnamnet.vn/en/business/stability-sought-for-thu-duc-city-prices-717572.html

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HCMC Transport Department proposes stopping bus advertising

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Buses on a street in HCMC display advertisements. The HCMC Department of Transport has proposed stopping bus advertising – PHOTO: VNA

HCMC – The HCMC Department of Transport has proposed that the city stop bus advertising due to low demand.

Since 2017, only one business won the bid for the right to advertise on buses in the city. The three-year package worth VND162 billion has just expired. All other tenders for bus advertising in the city failed to attract businesses although the Transport Department has lowered the charges, relaxed the requirements and offered flexible payment options.

According to the head of an advertising company, the demand for outdoor advertising, including bus advertising, in the city was high 10 years ago, but has dropped drastically as clients are switching to online advertising.

Besides this, many buses in HCMC have become old and worn out, while the prices of bus advertising are higher than that of online advertising.

Moreover, the HCMC Transport Department said the Covid-19 pandemic has severely affected the operations of the city’s bus system.

HCMC now has over 2,300 buses running on 137 routes. The city spends more than VND1 trillion to subsidize its bus system every year. If businesses advertised on all of the buses, the city would earn more than VND100 billion from bus advertising annually.

Source: https://english.thesaigontimes.vn/80818/hcmc-transport-department-proposes-stopping-bus-advertising.html

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HCM City seeks private investors for metro lines

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HCM City wants to attract more private investment instead of relying on official development assistance (ODA) to build its remaining metro lines, but experts have said that it faces a difficult challenge.

The inside of a passenger train carriage for Metro Line No.1 in HCM City. The city is seeking more private investment to build its metro lines. 

Dr. Vu Anh Tuan, director of Viet Duc Transport Research Centre, said the city was facing hurdles finding private investors for the metro lines.

“Investors are hesitant because these metro projects are all done on a massive scale and require a huge amount of capital, while revenue from ticket sales is not enough to cover operating costs,” he said.

Moreover, a lack of a legal framework on private-public partnership (PPP) investment in traffic and railway projects has added to the problem, according to Tuan.

Dr. Huynh The Du, lecturer at Fulbright University, said it was important to learn from the experience of other countries such as South Korea and China, which initially relied on advanced technology and foreign loans for their first railway lines. Later, they focused on domestic private investment and technology, which lowered the costs greatly.

Most of the metro lines in HCM City are being funded by ODA loans.

For example, the first metro line with a total investment of VND43.757 trillion (US$1.9 billion) is being built with an ODA loan from Japan of VND38.265 trillion, and reciprocal capital of VND5.492 trillion.

Total investment for metro line 2 is VND47.891 trillion, of which ODA is VND37.487 trillion from the Asian Development Bank (ADB), German KfW Development Bank (KfW) and European Investment Bank (EIB). The reciprocal capital is VND10.404 trillion.

The first phase of metro line No 5 will be funded by ODA loans from the ADB, KfW, EIB and the Spanish government.

“The problem with the use of ODA loans is the delay in disbursement procedures, which prolongs the projects and increases the public debt,” he said.

Solutions

Tuan said that administrative procedures must be minimised and favourable conditions created for investors both at home and abroad under public-private partnerships.

Because of the massive investment needed, the state must undertake the construction of infrastructures such as tunnel structures, elevated roads, stations and depots.

It will need to raise capital by selling bonds and creating a public transport development fund from various sources (such as fee collection for driving in the downtown area, and tolls for road use, fuel charges and others).

The private sector could purchase train carriages and the operating systems.

Over the next decade, HCM City will need about VND924 trillion ($42 billion) for 85 transport infrastructure projects, including 55 roads and bridges, seven waterway transport, eight railway and 15 road works.

In particular, the city needs $833 million in private investment for its metro lines.

This includes the sections of metro line No 2 between Ben Thanh Market and Thu Thiem and between Tham Luong and Tay Ninh Bus Terminal.

Metro line No 3A extending from Ben Thanh Market to Tan Kien Terminal in Binh Chanh District will require $3.02 billion.

Metro line No 3B from Cong Hoa Crossroads to Hiep Binh Chanh will cost $1.88 billion, while metro line No 4 between the Thanh Xuan and Hiep Phuoc urban areas will also run through multiple districts and cost $3.53 billion.

Line No 4B between Gia Dinh Park in Binh Thanh District and Lang Cha Ca Terminal in Go Vap District will require $1.33 billion.

All of them are expected to be built under the public-private partnership investment mode, but the city has yet to find private funding for them.

According to HCM City’s Management Authority for Urban Railways (MAUR), the Export-Import Bank of the Republic of Korea has recently asked the city government for permission to conduct an investment study for the second phase of Metro Line No 5.

This line will connect the Bay Hien intersection with the new Can Giuoc Bus Station and Da Phuoc Depot, under the PPP mode.

The bank said it would provide funding for the project’s pre-feasibility study, which will cover technical, financial and legal aspects, according to MAUR.

The city plans to build a total of eight metro lines running a total 220 km with total investment of nearly $25 billion. It also wants to build urban areas along the metro routes and underground spaces around metro stations to save land and ensure public transport.

With a population of about 13 million, the country’s largest city has been struggling with traffic congestion for years.

The number of personal vehicles has surged, with 825,000 cars and more than 8 million motorbikes, while public transport remains underdeveloped. — VNS

Source: https://vietnamnet.vn/en/business/city-seeks-private-investors-for-metro-lines-717677.html

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