Khang Dien House seeks shareholder approval for urban renewal BT project

Khang Dien House seeks shareholder approval for urban renewal BT project

Khang Dien House is seeking shareholder approval to back a $621-million urban renewal initiative in the historic core of Ho Chi Minh City, aiming to tap into new state-backed public-private partnership and build-transfer (BT) mechanisms.

Khang Dien House Trading and Investment JSC issued a BOD resolution on June 25, seeking shareholder approval to formally participate in the bidding for the more than 42,000 square metre Ma Lang and Cho Ga-Gao inner-city redevelopment project.

The venture follows the decision by Ho Chi Minh City People’s Council on June 19 to approve the investment policy for the project, which carries a preliminary total investment of around $621 million.

While Khang Dien prepared the initial investment-policy proposal dossier, municipal authorities have noted that formal investor selection remains pending under statutory bidding and selection procedures.

According to the supporting documents, the BT investor will self-fund all the initial capital, structured as 15 per cent equity and 85 per cent debt.

Construction is expected to commence in Q3 of 2026, with completion by Q4/2028 and handover for operation in 2029.

Deep inside the Ma Lang area, hundreds of degraded and damp houses measure just 5-7 sq.m

The large-scale urban upgrading project aligns directly with Politburo Resolution 09-NQ/TW to modernise existing neighbourhoods and boost social housing and Politburo Resolution 68-NQ/TW to encourage private investment in public infrastructure through public-private partnerships.

Under national decree frameworks, city officials have fast-tracked the project as an urgent, high-priority venture.

The BT project targets substandard, high-density housing stock across two non-contiguous precincts in the city centre.

The Ma Lang precinct in Cau Ong Lanh ward and the Cho Ga-Gao precinct in Ben Thanh ward currently suffer from severe structural deterioration and narrow alley networks that cannot accommodate emergency vehicles.

The redevelopment plan will transform these zones with integrated technical and social infrastructure, featuring an inter-level school and on-site resettlement housing in Ma Lang.

Preliminary estimates include a 38-story social housing block with 1,400 apartments and 93 low-rise houses in Ma Lang, alongside a 35-story, 760-apartment block in Cho Ga-Gao to accommodate thousands of displaced residents.

Once the completed infrastructure and resettlement works are transferred to the state, the contract will be settled primarily via a 133-hectare compensation land fund at the Tan Tao Residential Centre (Zone B) in Binh Tan, adjacent to Khang Dien’s existing 330-hectare Tan Tao project.

The preliminary gross land value is estimated at $916 million, while the net land value available for settlement after compensation, support, and resettlement cost is estimated at over $407 million.

To bridge any remaining gap, the state will provide a top-up from the city budget of up to approximately $214 million, drawn from the municipal mid-term public investment plan for 2026 to 2030, with payment expected within six months of completion in 2029.

Vietcap analysts noted that this pursuit is broadly consistent with management guidance provided at the company AGM in April regarding exploring potential BT projects in Ho Chi Minh City.

However, given the immense scale of the undertaking and its heavy reliance on debt financing, Vietcap analysts flagged that the project could exert significant upward pressure on the medium-term balance-sheet leverage of Khang Dien.

VIR