HO CHI MINH CITY – 17 SEPTEMBER 2020
The eastern expansion of the Ho Chi Minh City (HCMC) metropolis and the creation of “The Eastern City” is set to boost the local residential market and create significant opportunities for developers, investors and end-users in the coming years, according to a new report published today by CBRE Vietnam.
The report, entitled “Journey to the East: The Expansion of Ho Chi Minh City Metropolis – Part 1: The Residential Market” is the first in a series looking at the impact of the comprehensive development plan for all districts and wards in HCMC, which was issued by the HCMC Department of Home Affairs in May 2020.
The plan calls for the merger of Districts 2, 9 and Thu Duc in East HCMC to create a new and independent administrative entity informally dubbed “The Eastern City” or “Thu Duc City”, to complement and coexist with HCMC.
Owing to its strategic location within the “The Golden Triangle” of HCMC, Binh Duong and Dong Nai provinces, The Eastern City will play a key role in linking HCMC with adjacent provinces in terms of both transportation and economic activity.
CBRE’s report explains how new infrastructure currently under construction will facilitate the linkage of The Eastern City with the rest of HCMC. Projects already underway include Metro Line No. 1 - a 19.7 km mass transit line connecting Ben Thanh Station in District 1 to Long Binh Depot in District 9, which is due to be completed by the end of 2021 - and Thu Thiem Bridge No. 2.
Since the construction of Metro Line No. 1 began in 2012, many residential and retail developments have been built adjacent to the route, particularly along the Hanoi Highway at Thao Dien, Binh An and An Phu wards of District 2. Other hotspots in The Eastern City include Thu Thiem NUA, a 657-hectare site located in District 2.
Between 2015-2020, residential sales prices in District 2 increased by an average of 7.3% per year for the high-end segment, well beyond the citywide average, with significant potential for additional growth. Since 2018, CBRE has found that capital gains on the secondary market have been considerable as Metro Line No. 1 nears completion, with current average asking prices 25%-75% higher than launching prices. Residential supply in The Eastern City is expected to grow at an annual rate of 11.5% between 2020-2025, equivalent to 15,000-16,000 new units per year on average, exceeding the South (4.6%) and the West (5.3%).
Within Thu Thiem – a major urban redevelopment area in District 2 - new projects will predominantly target the luxury segment, while locations outside Thu Thiem are expected to attract strong demand from young professionals and families who seek convenience, modern facilities and active lifestyles.
CBRE also expects to see an active rental market for residential properties along Metro Line No. 1, with such developments keenly sought after for their convenience. Prime areas that are close to metro stations in The Eastern City will also attract branded residences.
“New developments in The Eastern City within existing and well-planned commercial/residential hubs will be keenly sought after by buyers and are expected to command a premium”, said Hang Dang, Managing Director, CBRE (Vietnam) Co., Ltd. ”The most popular areas will be An Phu, Thu Thiem and the Saigon Hi-Tech Park (SHTP). However, developers with land banks in The Eastern City will need to create new and attractive concepts in their developments to attract buyers and renters who may be spoilt for choice.”
“End-users and buy-to-let investors are advised to purchase residential units in developments located along metro lines within The Eastern City due to the better connectivity they offer to other areas within the city and to the HCMC CBD,” added Dung Duong, Senior Director, CBRE (Vietnam) Co., Ltd. “Buyers must thoroughly research issues such as noise and traffic congestion around metro station and pay close attention to developers’ reputation, projects’ legal status and construction progress.”