Flood crisis flips homebuyer priorities upside down
Flood crisis flips homebuyer priorities upside down
The recent heavy flood overrunning Ho Chi Minh City had a powerful impact on homebuyers’ demand, putting flood risks on top of their considerations and heavily altering the real estate market.
Stephen Wyatt, country head of JLL Vietnam, told VIR that floods heavily affect the real estate market in Vietnam, since they have a psychological impact on local and foreign homebuyers.
“While previously homebuyers would pay attention to factors like location, amenities, and fire-fighting system, they now lean towards properties that are located on higher grounds to minimise the risk and damage of flooding, not only within the property but also in the surrounding traffic area,” said Wyatt.
He gave the example of Thao Dien area in District 2 which lies relatively low, and where floods are a usual occurrence during the rainy and monsoon seasons.
“This will also make developers consider investing heavily in drainage infrastructure system, and resolve problems related to flooding,” he said.
According to him, the current drainage infrastructure system is insufficient to accommodate the increments in urban population. Therefore, the government should consider investing in upgrading the infrastructure before approving further projects.
Su Ngoc Khuong, director of Investment at Savills Vietnam, shared Wyatt’s views.
“The latest, rather serious flood in Ho Chi Minh City was a culmination of many reasons, with one of the most significant reasons being the fact that the development of the local infrastructure system has not kept up with the pace of urbanisation and population increase. This causes a series of urban issues, such as traffic congestions, floods, traffic accidents, and environmental pollution,” Khuong told VIR.
To combat these problems, the local authorities must accelerate smart city development. However, they need to synchronise all databases related to urban operations, such as lighting system, power supply, telecommunications, drainage, waste treatment, and so on, and utilise high-technologies, according to Khuong.
Last but not least, Khuong stressed the urgent need for a synchronised and complete zoning for Ho Chi Minh City.
“Zoning always has a major impact on the infrastructure system and the real estate market. A well-developed real estate market can only be set up if it has perfect zoning,” Khuong stressed.
According to the figures from the Steering Centre of the Urban Flood Control Programme of Ho Chi Minh City, the city now has 66 places susceptible to flooding. Especially, after the heavy rain on November 25 caused by storm Usagi, more than 100 routes were flooded with water levels ranging from 10 to 70 centimetres.
Areas which suffered severe flooding could be found in all districts, with the most in districts of Binh Thanh, Go Vap, Thu Duc, 2, and 7.
Nguyen Huu Canh street in Binh Thanh district, Le Van Viet street in District 9, Quoc Huong street in District 2, and Huynh Tan Phat street in District 7 were submerged under half a metre of water, and many vehicles stalled and were stuck in the middle of the flood area.
The flood had a serious impact on homebuyers’ decisions in the city. According to Nguyen Huy Vu, general director of real estate distributor BVLand, buyers are now seriously considering flood risks before making a decision about buying a property.
“Flood risks are emerging as one of the most important factors to consider in a residential unit, perhaps even superseding location, price, and facilities,” Vu said. “Ho Chi Minh City lies on a north-south slope, which means that districts 9, Go Vap, and 12 are less prone to flooding than more southern-lying areas of the city.”
Areas located next to canals and rivers also have to pay attention to the tides of the river system in and around the city, which have also flooded many areas and roads.
Mai Thu Huong, director of Nam Phong Real Estate Trading Centre in District 7, said that developers had to reduce prices at several projects which have been flooded multiple times, but sales remain slow and many units remain unsold.
“Second buyers should be careful with projects where the first buyers [or speculators] offered a lower price than those quoted by the developers because these projects are likely to have problems, including flood risks,” Huong said.
The heavy rains on November 25 did not only flood roads but also invaded apartments in the upper stories of residential towers.
At Le Thanh Residences in Binh Tan district, Lotus Apartment in Thu Duc district or Citi Home in District 2, the heavy rains leaked into the units, causing a great deal of inconvenience and damage to residents.
Especially, the basements of several high-rise apartment projects in Phan Xich Long street of Phu Nhuan district were also flooded, damaging many vehicles.
The Ho Chi Minh City People’s Committee recently called on foreign investors to join 17 flood prevention and waste treatment projects by 2020.
Vice Chairman of the Ho Chi Minh City People’s Committee Tran Vinh Tuyen said that the city is seeking investment capital of more than VND96 trillion ($4.17 billion) in order to implement the projects.
The city’s master plan on water drainage system approved by the prime minister in 2001 stipulates that with an area of more than 580 square kilometres, the city needs 6,000 kilometres of sewers of all types.
However, at present, the sewer system has a total length of just over 4,000km. The main water sewerage gates, two of 12 wastewater treatment plants, some 64 of 149km of dykes around the Saigon River, and one of 10 tide-controlling sewers, have been completed, whilst other constructions are ongoing.
