New city proposal to breathe life into investing prospects

New city proposal to breathe life into investing prospects

The recent government agreement in principle to set up a new city in the east of Ho Chi Minh City could bring massive funding prospects for both domestic and foreign investors.

New city proposal to breathe life into investing prospects

According to Ho Chi Minh City People’s Committee Chairman Nguyen Thanh Phong, the establishment of Thu Duc city – based on a merger of District 2, District 9, and Thu Duc district – is seen as a new motivation to push the economy of Ho Chi Minh City and the southern region as a whole.

In January, US design firm Sasaki in collaboration with enCity, an international planning practice based in Singapore and Vietnam, were selected by Ho Chi Minh City authorities to carry out the design to develop an innovative city, now renamed Thu Duc city.

According to Romil Sheth, Sasaki principle and urban designer, Ho Chi Minh City has the potential to expand upon the traditional triple helix model of an innovation district’s structure – involving academia, government, and industry – to more directly involve communities and society at the core of its innovation activities while ensuring long-term ecological and environmental resilience.

The project takes into consideration the increasing flood risk in the southern part of Vietnam, by introducing four major approaches: capitalising on major industrial relocations and investments; leveraging the existing land bank of the Vietnam National University already located on higher ground; building upon recent transportation investments; and establishing policies that leverage the value of urban land while preserving the absorption capacity of existing landscapes.

Drawing in investments

At last week’s Ho Chi Minh City – US Business Summitheld last week in Vietnam, Duong Anh Duc, Deputy Chairman of Ho Chi Minh City People’s Committee said that US investors are paying interest in at least three large-scale projects for the city. They are the establishment of Thu Duc city, the development of Ho Chi Minh City into a smart city, and an international financial centre.

Secretary of Ho Chi Minh City Party Committee Nguyen Thien Nhan said that there will be huge chances for investors to pour money into the three proposed projects. “Ho Chi Minh City is the largest city of Vietnam with high labour intensity and three large-scale development projects fit for potential financiers. The committee will offer the best incentives and support to investors to implement their activities here,” Nhan said.

Designed to become an innovative city, the future Thu Duc city will attract both domestic and foreign investment into interactive technology, high-tech manufacturing, fintech, academia and research, and health and wellness.

Located on an area of 210 square kilometres, Thu Duc city is estimated to make a contribution of 30 per cent of the regional GDP for Ho Chi Minh City, or around 4-5 per cent of the country’s GDP. Despite only being at the design stage, the three districts involved have been sought after by buyers and speculators.

At the Centerhome Riverside project in Truong Tho commune, which is expected to be the centre of future city, almost all of the 50 townhouses have sold out with charges from VND5.2-9 billion ($226,000-391,000) after a short time of launching.

In An Phu New City in District 2, the price of a townhouse increased to VND200 million ($8,700) from just VND150 million ($6,500) per square metre just a month ago.

Especially, in Dong Tang Long New Urban Area in District 9, every sq.m of townhouse is sold at VND130 million ($5,600), from VND45 million ($1,900) at the end of 2019.

In Centum Wealth in Thu Duc District, an apartment project developed by Thu Duc House and Korea Daewon, the price is now VND10 million ($434) per sq.m higher than those quoted some months ago, which sat at VND43-45 million ($1,850 -1,950) per sq.m. The increase prices were also reported in many other apartment projects such as the Lavita Garden, City Grand, and D’Lusso, Safira Khang Dien, Saigon Gateway, and Hausneo.

According to a survey carried out by property sales website ChoTot, the price of an apartment in districts 2, 9, and Thu Duc has increased 18 per cent compared to April earlier in the year.

Cao Van Trung, general director of Centerhome JSC, said that the number of buyers coming to his office has increased by 5-7 times against three months ago. “Despite COVID-19, interest from buyers and speculators has increased recently due to the new plan to set up this future city,” Trung said, adding that the price of the project is now quoted at 7 per cent higher than last month.

New problems to tackle

The fast and strong increase in property in the area has nevertheless offered a warning for buyers and speculators.

Nguyen Hoang, research director from DKRA Vietnam, told VIR that the concept of “a city in a city” has not appeared in Vietnam so far, meaning obstacles in implementation that the country has never encountered.

With only initial information available on the establishment of Thu Duc city, many developers and speculators are utilising it for advertising their projects and increasing their prices. “I assume that in the next five years the area will become home for mid-income people and upward, since lower-income people will not be able to afford the property prices here,” Hoang said. “Therefore, the development plan of the future city should be added affordable housing for local residents.”

Moreover, detailed zoning plans for population density, property, architecture, and many other aspects have not been designed yet, leading to missing information for investors and buyers to determine their attraction to the area.

Meanwhile, Dr. Tran Du Lich, member of the Prime Minister’s Economic Advisory Team, stressed that setting up Thu Duc city does not simply compose of combining three districts into one. “In order to successfully set up an innovative city in the east of Ho Chi Minh City to be a motivation for economic development and improve people’s living standards, the area must be well connected to the current heart of the city,” Lich said.

Moreover, the future city must be also well connected to the development plan of neighbouring provinces such as Binh Duong, Dong Nai, and Long An.

VIR