Ho Chi Minh City:
The opportunity lies in building homes
August 2016
Vietnam is one of the fastest growing countries in Southeast Asia. In
the first half of 2016, Vietnam’s GDP grew by 5.5% and is expected
to grow 6.0-6.5% in 2016-20. Ho Chi Minh City GDP growth has
been faster than Vietnam, at 7.5% in the first half of 2016.
The strong economic growth is a result of favourable demographics,
continued urbanisation, industrialisation and higher employment in
the services sector and a rising middle class.
Demographics and a rising middle class
Vietnam’s population has grown rapidly from 66 million in 1990 to
91 million in 2016. This makes Vietnam the third most populous
country in Southeast Asia after Indonesia and the Philippines. While
the birth rate is low at 2.09, internal migration from the countryside
to urban areas will drive urban population growth. The World Bank
expects Vietnam’s urban population to grow by 2.4% per annum
until 2025, the highest in Southeast Asia.
Fig 1: GDP growth of Vietnam and Southeast Asia
Fig 2: Urban population growth
9%
3.5%
8%
3.0%
7%
6%
2.5%
5%
2.2%
2.0%
4%
2.3%
2.0%
2.2%
1.6%
1.5%
3%
2%
1.0%
1%
0%
2.6%
2.2%
1.9%
1.6%
1.8%
1.5%
0.9%
0.5%
05 06 07 08 09 10 11 12 13 14 15 6E 7E 8E 9E 0E
20 20 20 20 20 20 20 20 20 20 20 201 201 201 201 202
ASEAN 6
Source: IMA Asia
2 JLL
Vietnam
0%
Vietnam Indonesia Thailand Malaysia Philippines Singapore
2010-15
Source: World Bank
2015-20
2020-25
Over the next two decades, Vietnam will be in a demographic
golden age. Employment in manufacturing and services has
increased. Twenty-five per cent of the population is aged between
10 and 24; the median age is around 30. According to the
Brookings Institute, Vietnam has the fastest growing middle-class
in Southeast Asia – 18% per annum over the period 2016-20,
accelerating from 15% per annum in 2005-15.
Employment in the services sector
Fig 3: Growth of middle-class population
Fig 4: Percentage of employed persons in the services sector
20%
80%
18%
70%
16%
Vietnam’s economy is still immature, with about 47% of employed
persons still working in the agriculture, fishery and mining
sectors, compared to 28% in Southeast Asia. Employment in the
manufacturing and services sectors has increased substantially in
the last two decades. Employment in the services sector in Vietnam
has increased from 19% of the workforce in 1996 to 32% of the
workforce in 2016. We expect this to continue to rise in the next ten
years, boosting income growth.
60
60%
14%
12%
50%
10%
40%
8%
38
45
48
54
42
38
19
20%
4%
32
30
30%
6%
10%
2%
0%
70 71
Vietnam Indonesia Philippines Thailand Malaysia Singapore
2005-15
2016-20
Source: Brookings institute
0%
Indonesia Malaysia Philippines Singapore Thailand
1996
Vietnam
2015
Source: World Bank
Ho Chi Minh City trip report: The opportunity lies in building homes 3
Ho Chi Minh City Residential outlook
Ho Chi Minh City has about 80,000 apartment units. Affordable,
mid-end and premium apartments make up 43%, 42% and 15% of
the stock, respectively.
In the next three years, based on the private apartment units that
have been launched for sale, the stock could increase by 74%. For
premium and luxury apartments above USD 2,000 per sqm, the
stock is expected to double.
Fig 5: Apartment units in Ho Chi Minh City
Fig 6: Apartment sales in Ho Chi Minh City
30,000
160,000
140,000
25,000
120,000
20,000
100,000
+74%
80,000
60,000
40,000
+62%
Affordable
2Q16 stock
4 JLL
5,000
+110%
Source: JLL
15,000
10,000
+72%
20,000
0
The high supply in the pipeline is a result of strong sales in 2015
and the first half of 2016, when developers sold 24,000 and 16,800
units, respectively, 250% higher than the sales rate in 2011-14.
In 2011-14, premium and luxury apartments made up just 10% of
apartment sales, but in 2015 and the first half of 2016, these made
up 27% and 44% of apartment sales, respectively.
Mid-end
Premium
Luxury
Including launched units
Ho Chi
Minh City
0
2011
2012
2013
Affordable and mid-end
Source: JLL
2014
2015
Premium/Luxury
1H16
Why are sales so strong?
We believe investment into the residential market picked up
momentum in 2015 due to stronger economic fundamentals as
well as regulatory changes. Since 2011, Vietnam has attracted
strong FDI into the manufacturing sector as it became a lower cost
alternative to China. Vietnam’s exports grew by 16% annually on
average in 2011-16, compared to just 6% for China.
As the trade deficit narrowed after 2011, the Vietnamese dong
stabilised at USD 21,000 for an extended period. Inflation declined
from 9% in 2012 to an estimated 1.4% in 2016, allowing deposit
and borrowing rates to fall to 5.0% and 8.5%, respectively, in 2016.
Fig 7: Export growth on USD basis for Vietnam and China
As confidence in the economy grew, interest in property investment
was revived. In November 2014, regulatory changes were made
to allow foreigners to buy up to 30% of any single condominium
building or a maximum of 250 houses in any one administrative
ward. This was implemented in July 2015. Foreigners will be able
to own the property for 50 years and enjoy the same rights to
lease, transfer or sell the property. Foreigners may extend their
home ownership after 50 years, subject to approval. This further
stimulated investor interest in Vietnam property.
Fig 8: Manufacturing hourly wage in USD in Vietnam and China
40%
5.0
30%
4.0
20%
3.0
10%
2.0
0%
1.0
-10%
2013
2014 2015
2016E
8%
10%
-4,000
-6,000
-8,000
0%
-10,000
Export growth
USD
2019E
2018E
2017E
2016E
2015
2014
2013
2012
-10%
2011
2015
2016E
Vietnam
Import growth
USD
-12,000
-14,000
24,000
25%
23,000
20%
22,000
21,000
15%
20,000
10%
19,000
8.5% 18,000
5%
17,000
0%
1.4%
Inflation rate
Lending rate
2016E
20%
2010
2014
2015
-2,000
2009
2013
2014
0
30%
2008
2012
2013
2,000
Source: IMA Asia
2011
Fig10: Inflation and interest rate
40%
Trade balance
USDm(RHS)
2010
Source: IMA Asia
Fig 9: Trade balance and export growth
-20%
2009
China
China
Source: IMA Asia
0
2012
Vietnam
2012
2011
2011
2010
2010
2009
2009
2008
-20%
16,000
15,000
VND/USD (RHS)
Source: IMA Asia
Ho Chi Minh City trip report: The opportunity lies in building homes 5
Is there any oversupply in the residential market?
While the residential supply is expected to grow by 74% over the
next three years, we think the market will be able to absorb the
increase.
The stock of apartments relative to Ho Chi Minh City’s population is
low compared to other Southeast Asian cities, even after the units
that have been launched have been developed. The government
is seeking ways to encourage developers to undertake more
affordable housing projects to meet the housing needs of the city.
However, the supply of premium and luxury apartments seems to
be high, especially after the supply in the pipeline completes. We
estimate that Ho Chi Minh City could have close to three prime
apartments per 1,000 persons, close to the average in Bangkok,
Kuala Lumpur and Manila, but higher than Jakarta.
Despite the strong sales volume in 2015 and the first
half of 2016, premium apartment prices have risen
by just 9% in the last six quarters. We believe this is
due to the range of choices developers have rolled
out, creating strong competition. The sales rate
stayed strong at 60-70% in 2015 and in the first half
of 2016, compared to 30% in 2010-14.
In contrast, prices rose 106% in 2005-07 when strong foreign
capital flowed into Vietnam in anticipation of a strong recovery in the
economy and the property market. During this period, developers
sold around 1,500 units per year, achieving a sales rate of 65%.
Prices have corrected by 30% over seven years in 2007-14. Thus,
the premium apartment price of USD 2,180 per sqm is still 24%
below the 2007 peak.
We expect overall apartment prices to rise by 5-7%
per annum in the next three years, supported by
strong absorption and affordability levels. Mid-tier and
affordable apartment prices could rise by up to 10% per
annum.
Further, apartment rents rose 4% in the last six quarters, keeping
market yields relatively stable at 5.7%. The gap between rent yield
and borrowing cost has narrowed from 880 bps in 2008 to 280 bps
in the first half of 2016. As the supply in the pipeline completes in
the next three years, there may be downward pressure on rents and
yields. However, given the low inflation experienced in 2015-16,
there is scope for interest rates to continue to fall, supporting prices.
Fig 11: Apartment stock per 1,000 persons, 4Q15
Fig 12: Prime apartments per 1000 persons, 4Q15
50
45
40
35
30
25
20
15
10
5
0
4.0
Will home prices continue to rise?
3.5
3.0
2.5
2.0
1.5
1.0
0.5
HCMC in HCMC in
2015
2019
Source: JLL
Jakarta
Bangkok
Kuala
Lumpur
Manila
0
HCMC in HCMC in
2015
2019
Jakarta
Bangkok
Kuala
Lumpur
Manila
Source: JLL
Fig 13: Ho Chi Minh City premium apartment price USD/sqm
Fig 14: Ho Chi Minh City premium apartment rent and yield
3,000
19%
200
180
2,500
14%
160
2,000
140
9%
120
1,500
4%
Source: JLL
Secondary
Net effective rent
USDpsm (RHS)
Source: JLL
Market yield
16
1H
15
20
14
20
13
20
12
20
11
20
10
20
09
20
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
1H
16
05
20
20
Primary
6 JLL
100
08
1,000
Borrowing cost
Are apartments affordable and is the market growth
sustainable?
Table 1: Ho Chi Minh City apartment prices
Apartment
type
We believe Ho Chi Minh City apartments are still affordable
compared to income levels. Based on the top quintile household
monthly income of USD 1,337, private apartments in the affordable
and mid-end range cost about 3.9 to 6.6 years of income, assuming
an apartment size of 75 sqm. The entry-level apartment price to
income ratio of 3.9 years is 30% lower than the average of 5.7
years among other Southeast Asian cities.
2Q16 price
USD psm
Yoy
change
Apartment
price USD
Home price to
income ratio
Affordable
Mid-end
Premium
827
1,414
2,192
7.9%
4.6%
8.7%
62,025
106,050
3.9
6.6
Luxury
3,925
-3.1%
Source: JLL
Even if prices rose 30% over the next three years, it is likely that the
home price to income ratio would be stable given that incomes have
been rising at around 10% annually in the last few years. In the last
five years, home prices in Ho Chi Minh City have declined amid
income growth, bringing the home price to income ratio from 7.6
years in 2010 to 3.9 years in 2015.
According to the World Bank, urban households in Vietnam have
a median monthly income of USD 460 while the top quintile
household has a monthly income of USD 1,340. Based on this,
only households in the top 20 percentile can afford mass market
apartments built by commercial developers.
Fig 15: Home price to income ratio for Southeast Asian cities
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0
7.0
5.3
5.6
5.9
5.7
3.9
HCMC
Source: JLL
Kuala
Lumpur
Bangkok Singapore Jakarta
Manila
Fig 16: Apartment price USD
For households outside of this income bracket, the government
launched a VND 30 trillion stimulus package from June 2013 to
extend affordability to middle-income households by lowering
mortgage rates to 5% compared to market rates of 7.5-10.0%.
80,000
8.0
70,000
7.0
7.6
60,000
6.0
6.4
The subsidy is stated to apply to social housing or apartments built
by commercial developers that are smaller than 70 sqm and cost
less than VND 15 million per sqm (or USD 673 per sqm).
50,000
Since the programme started, loan growth reached 13% in 2014,
18% in 2015 and is likely to be 18-20% in 2016. Our discussions
with developers in Ho Chi Minh City indicate that 50-80% of
apartment buyers are taking on a mortgage for 50-65% of the
apartment price and loan tenures range from 15 to 20 years.
20,000
2.0
10,000
1.0
The adoption of home loans is much higher than in 2011 when the
majority of buyers used cash for apartment purchases.
Source: JLL
5.0
5.5
40,000
4.4
4.0
30,000
0
2010
2011
2012
2013
Home price to income ratio (RHS)
3.9
4.0
3.0
0
2014
2015
Apartment price USD
Table 2: Urban incomes in Vietnam by quintile and housing affordability with and without the VND 30 trillion mortgage programme
Income
quintile
Monthly income
VND 000
Monthly
income USD
Loan amount
USD
Down
payment
Down
payment USD
Affordable home
price USD
Apt size
USD psm
Q5
29,805
1,337
51,794
30%
22,198
73,992
75
987
Q4
Q3
Q2
Q1
14,272
10,313
7,322
3,982
640
462
328
179
23,252
12,715
4,767
1,607
70
70
70
70
332
182
68
23
18,601
20%
4,650
10,172
20%
2,543
4,767
0%
1,607
0%
With VND 30 trillion programme
67,605
30%
28,974
96,578
75
1,288
24,280
20%
6,070
30,349
70
434
14,620
20%
3,655
18,275
70
261
8,305
0%
8,305
70
119
3,387
0%
3,387
70
48
Source: World Bank, JLL estimates
Ho Chi Minh City trip report: The opportunity lies in building homes 7
Is a bubble forming in the residential market?
Fig 17: FDI into Vietnam
Several developers that we spoke to in Ho Chi Minh were
conscious of the property and stock market bubble in 2008.
However, we find that current conditions are not as effervescent as
conditions in 2007-08.
80,000
50,000
1500
40,000
1000
30,000
20,000
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
10,000
Total registered capital (USD m) (*)
Implementation capital (USD m)
Number of projects
Fig 18: Vietnam stock index (July 2000 to July 2016)
1,000
800
600
400
200
0
10
20
11
20
12
20
13
20
14
20
15
20
16
09
2008
20
08
20
07
20
06
20
05
2004
20
04
20
20
20
20
03
200 million
0 million
2012
2016
Source: https://www.vndirect.com.vn/portal/cong-cu-phan-tich-chungkhoan/bieu-do-ky-thuat.shtml
8 JLL
0
Source: General Statistics Office Vietnam
02
In contrast, the Vietnam stock index rose 144% in 2006 and
56% in 1Q07 as the market priced in expectations of high GDP
growth upon Vietnam’s World Trade Organisation accession,
positive operating results from listed companies and increasing
foreign portfolio investments. Rising concern over the risks of an
overheating stock market prompted the State Bank of Vietnam to
cap securities investments and hike interest rates three times from
8.75% to 14% in the first half of 2008. Subsequently, the deposit
interest rate rose to 16-18% while the loan interest rate was at 2021%. In the first six months of 2008, the VN-Index fell by 60%.
2000
60,000
Price (VND)
The Vietnam stock index was stable in 2014-15, rising 15% over
two years. In the last 12 months, the index rose 3%.
70,000
Volume
FDI into Vietnam in 2014 and 2015 was stable compared to 201013 and most of the capital inflow was deployed into projects. In
contrast, the capital inflow to Vietnam in 2007 was triple that of
2005, and in 2008, capital inflow rose three times in a year. Most
of the capital was not deployed into projects. While capital inflow
in 2008 was six times higher than 2005, the number of projects
implemented was just 10% higher in 2008 compared to 2005.
2500
Should developers enter the residential market?
Developers we spoke to in Ho Chi Minh City stated that they
were making EBITDA margins of 25-30% on prime and mid-end
residential projects. Affordable and mid-end residential projects are
likely to sell reasonably well given affordability levels. Furthermore,
the supply growth in these segments is much lower than premium
projects so competition for buyers will be less intense.
However, acquiring good land plots that have been cleared and
have clean title deeds at a reasonable price continues to be
challenging in Vietnam, as with many other Southeast Asian cities.
Foreign developers that are new to the market should consider
partnering with local groups on joint ventures. In June 2015, the
government eliminated the 49% limit on foreign ownership in many
listed companies, a step to spur investment inflows. This provides
an opportunity for foreign developers to take on a majority stake in
residential projects in partnership with local groups.
Pham
D
Van
ong
Binh Loi
Bridge
QL13
Tan Son Nhat
Airport
Binh Trieu
Bridge
Truong Son
on River
Sai G
We believe the strong office absorption tracks employment growth
in the services sector. In the next ten years, developers are likely to
build more apartments along the new metro line that is scheduled
to complete in 2020. Construction of the first metro line in Ho Chi
Minh City commenced on 28 August 2012, connecting Ben Thanh
Market to Suoi Tien. The line is expected to consist of 14 stations,
covering 19.6 km, of which 2.2 km will be underground and the
rest elevated, running across districts 1, 2, 9, Binh Thanh and Thu
Duc. Set to start operations in 2020, Metro Line 1 will strengthen
the accessibility of housing developments located along its route,
including the Thu Thiem and Thao Dien areas.
The Nassim
Bach Dang
Bridge
Vo
N
guy
en
-Suoi
ien
Thanh
1: Ben
Metro
way
h
ig
H
i
Hano
Thao D
Tan Cang
Gia
p
he
Ng
Vie
t
Xo
Ph
nh
uy
Ph
ien
Sai Gon
Bridge
Ng
Di
Ph
u
an
Ng
en
g
Di
un
en
B
Tien
u y en Huu Canh
Tin
h
Van
Thanh
nh
nh
Di
Bi
n
Tie
Kh
iem
Ho
inh
Kh
g
ai
an
iM
Th
en
uy
aT
ru
Vinhomes
Golden River
ng
Ng
Lo
g
ue
H
en
Le
uy
Ng
Ben Thanh Market
Ton Duc Than
hia
i
oi
iB
he
Kh
Ha
K
Van
Ky
Tran
m
Thu Thiem
Bridge
Ba Son
l
ipa
nic ter
Mu hea
T
Na
Ng
Hoang Van Thu
u
ang Lu
Phan D: Sai Gon
5
Metro
oc
Giu
– Can
i Th
i Ch
Ma
o
Thu Thiem
Tunnel
Ham Nghi
Ho Chi Minh City trip report: The opportunity lies in building homes 9
Ho Chi Minh City office outlook
Based on JLL data, no new Grade A office buildings were
developed in 2000-08. In the last six years, the stock of Grade
A office buildings increased by 200% with completion of Kumho
Asiana Plaza, Vincom Center, Bitexco Financial Tower, Times
Square and Vietcombank Tower. This brought the stock of Grade A
net lettable office space to 220,000 sqm.
In the last ten years, employment in the financial, insurance, real
estate and business services sectors in Vietnam has grown by 11%
per annum to 3.64 million in 2014, prompting annual occupied office
space expansion of 9.6% on average.
Over the next ten years, we expect demand for office space to
continue to grow strongly by 8-10% annually in Ho Chi Minh
City as the economy develops. We expect the proportion of the
population employed in services to rise from 30% to 40%, and an
annual GDP growth of 5.5-6.0%.
While the Grade A office occupancy rate fell to 63% immediately
after completion of Vincom Center and Bitexco Financial Tower in
2010, the space was gradually taken up between 2011 and the first
half of 2015 and the occupancy rate recovered to 93%. The office
market has become a landlord’s market due to the limited supply
of office space over 1,000 sqm until the second half of 2017 while
demand continues to be strong
This provides a great opportunity for developers to
acquire sites to build more office space to cater to
new companies and expansionary demand.
Fig 19: Grade A office demand, supply and occupancy rate
Fig 20: Employment in finance and business services sectors
Grade A office space 1000 sm
120
millions
4.0
Change in stock
Source: JLL
10 JLL
Change in occupied stock
Occupancy rate
Employment in finance and business services
Occupied office space '000 sqm (RHS)
Source: Vietnam General Statistics Office
14
20
13
11
12
20
20
20
20
10
0
09
50%
0.5
20
-20
60%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016E
2017E
2018E
0
1.0
08
70%
20
1.5
20
40
2.0
07
80%
20
60
2.5
06
90%
3.0
05
80
3.5
20
100%
20
100
200
180
160
140
120
100
80
60
40
20
0
Compared to the other Southeast Asian cities, GDP per capita of
USD 2,100 in Vietnam still lags and as a result, office stock per
capita in Ho Chi Minh City is still low. With just 1.7 million sqm of
office space, Ho Chi Minh City’s office stock is less than half of the
stock in Jakarta, Kuala Lumpur, Bangkok and Manila.
than these more developed cities. While the Ho Chi Minh City prime
office market yield at 8.5-9.5% is high, the spread above the cost
of debt is thin at 150-250 bps. In contrast, investment yields in
Bangkok, Manila or Kuala Lumpur provide a spread of 300-400 bps
over the cost of debt.
Rents and capital values seem expensive due to
lack of significant stock
While office demand is likely to grow faster than the economy, we
believe office rents and capital values in Ho Chi Minh City are not
low.
We believe this is symptomatic of a fledgling city in the early stages
of development. Before the development of a sufficient stock of
suitable office buildings for international companies, rents and
capital values to be expensive and companies may operate out of
apartments or standalone buildings until the city gradually builds
more office buildings.
Currently, Ho Chi Minh City gross effective prime office rent of
Currently, the Ho Chi Minh City gross effective prime office rent
of USD 550 per sqm per annum is 40-160% more expensive than
other Southeast Asian cities, excluding Singapore. Capital values
are similarly high at USD 4,900 per sqm, 25-160% higher
However, as the city develops and matures, office rents and capital
values may moderate. In Ho Chi Minh City’s case, the development
of the Thu Thiem area across the river from District 1 over the next
10-20 years could prompt the growth of a new CBD that could more
than double the office stock and allow rents to moderate.
Fig 21: GDP per capita in USD ‘000
Fig 22: Office stock per capita in metro cities city (sqm)
60
1.60
56
50
50
49
1.40
47
1.37
1.20
40
1.00
30
0.80
20
0.72
0.64
0.60
5.4
3.0
2.7
2.1
pa
Ma n
lay
sia
Ch
in
Th a
ail
a
Ind nd
on
e
Ph sia
ilip
pin
e
Vi s
etn
am
a
Ja
ali
str
Au
Si
ng
ap
or
US
e
0
1.5
0.43
0.40
0.21
0.20
ia
6.1
Ind
8.5
10
0.58
0.00
Singapore Jakarta
KL
Bangkok
Manila
HCMC
Source: World Bank
Source: JLL
Fig 23: Prime office rents per annum in Southeast Asian cities
Fig24: Prime office yields and capital values in Southeast Asian cities
1,200
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
1,000
800
777
600
548
400
331
304
279
206
200
0
12 2013
10 2011
20
20
Jakarta
KL
Singapore
Bangkok
Source: JLL
14
20
E
E
E
E
17
16
15
18
20
20
20
20
Manila
HCMC
Singapore HCMC
Jakarta Bangkok Manila
Price USDpsm (RHS)
Market yield
KL
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
10Y bond yield
Source: JLL
Ho Chi Minh City trip report: The opportunity lies in building homes 11
Thu Thiem New Urban Area
The People’s Committee of Ho Chi Minh City announced in 2002
that Thu Thiem would be developed into a new financial and
commercial hub of Ho Chi Minh City. Thu Thiem will play a strategic
role in the development of the east side of the city, in which
several important industrial, social and economic zones have been
established. The total land area of the Thu Thiem New Urban Area
is 657 ha, out of which 215 ha will be for commercial and residential
projects, 159 ha for roads and infrastructures, and 281 ha for public
green parks.
The area is now connected to District 1 and other parts of the city
via the Thu Thiem tunnel and a new bridge. Four other bridges and
a metro line are under planning. Upon completion, these will provide
Thu Thiem with the distinct advantage of a seamless connection
with the current CBD. The Thu Thiem New Urban Area has been
divided into eight main functional areas. According to the Thu Thiem
Authority, each area, or “neighbourhood”, is characterised by a
distinct mixed-use programme and density range, as well as public
spaces and key landmark buildings.
The “Core Area” of Thu Thiem is divided into two
neighbourhoods known as #1 and #2 (2a, 2b, 2c)
The Northern residential areas consist of #3 and #4
4
3
7
1
6
2a
5
The residential areas along the Mai Chi Tho Boulevard are #5
and #6
#7 includes the Eastern Residential Development, Urban
Resort Hotel and Marina
#8 encompasses the entire Southern Delta area
2b
Major approved projects in the area:
2c
8
• Dai Quang Minh: Lot 5 & 6
• Eco Smart City: Lot 2a
• Empire City: Lot 2b
12 JLL
Major projects in Thu Thiem New Urban Area
Dai Quang Minh
In December 2014, Dai Quang Minh Real Estate Investment JSC
entered into an agreement with the People’s Committee of Ho Chi
Minh City, under which the company committed to building four
major roads in Thu Thiem New Urban Area with an estimated cost
of USD 550 million. In exchange, Dai Quang Minh was given the
right to develop an 80-ha urban area in Thu Thiem that includes
luxurious residential, office, school and hospital facilities. The
estimated cost of development is USD 85 million.
Eco Smart City
South Korean conglomerate Lotte and its Japanese partners,
Mitsubishi and Toshiba, have announced the construction of the
USD 2.2 billion Eco Smart City project in Thu Thiem. Construction
started in July 2016.
Covering an area of 16.71 ha, the complex features a luxury
trade centre, office buildings, hotels, serviced apartments and
multifunctional condos, with a highlight of a 50-storey building.
Empire City
Empire City is a 14.5 ha project located just next to the
mouth of the Thu Thiem tunnel. It will comprise premium
residential apartments, office and retail properties as well
as an 86-storey integrated mixed-use tower complex, which
upon completion will become the tallest building in Vietnam.
The planned GFA is 730,000 sqm with a total investment of
USD 1.2 billion. The construction commenced in October
2015 and is expected to complete its four phases in 2022.
In March 2016, Keppel Land entered into an agreement to
subscribe for a 40% interest in Empire City Limited Liability
Company. The other joint venture partners are Gaw Capital
Partners (30%) and Tien Phuoc Joint Stock Company and
Tran Thai Real Estate Co Ltd (30%).
Ho Chi Minh City trip report: The opportunity lies in building homes 13
Details of projects we saw on this trip
The Nassim
Golden River (Ba Son) Township)
Developer
Hong Kong Land & Son Kim Group
Vinhomes (Vingroup)
Address
No. 30, Street 11, Thao Dien Ward,
District 2, Ho Chi Minh City
2 Ton Duc Thang, D1, Ho Chi Minh City
Land Area
6,464 sqm
25.3 ha (2.72 million sq ft)
No. of units
4 towers, 29 floors, 238 residential units
13 apartment buildings consisting of 3,000 units
and 63 villas with area ranging from 225 to 475 sqm
Completion
2Q 2018
December 2017 (Phase 1)
Built Ratio
-
18.6%
Unit Mix
1BR: 50-52 sqm; 2BR: 77 sqm
3BR: 108-123 sqm; 4BR: 140-146 sqm
Penthouse: 408-463 sqm
Officetel: 1BR 42-45 sqm; 2BR 62-68 sqm;
Apartment: 2BR 72-85 sqm; 3BR 92-114 sqm;
4BR 146-150 sqm
Indicative Pricing
Starting from US$3,000 psm - 20% to 30%
higher than competition in the area
USD 3,000-USD 6,000 psm
USD 150,000-USD 700,000 per unit
Payment Scheme
• Refundable registration fee: VND 50 million
• 1st deposit: VND 50 million; 2nd deposit 7 days
after 1st deposit: 10%; 3rd deposit at completion
of pile cap: 10%
• 1st instalment upon foundation completion: 10%;
2nd and 3rd instalment every 2 months: 20%
(10% each) + tax
• 4th instalment upon condo handover (2Q18):
45%, plus 2% management fees and tax
• Upon issue of ownership title: 5% + tax
• Deposit: VND 200 million (~SGD 12,000), Down
payment: 20% / 30%
• 1st 6 months: 40% / 30%, 2nd 6 months: 10%
• Handover (Dec. 2017 onwards): 25% plus
maintenance fee (2%) and tax of 5% of unit value
• Receiving of ownership certificate: 5%
For mortgages, LTV could go up to 75% with
interest support from the developer for 8-20 months
Buyers Profile
Reached 30% limit on foreign buyers
80% local, 20% foreigners (mostly South Koreans
and Chinese)
Facilities
25-m lap pool, aqua deck with loungers, feature
cabanas, Jacuzzi, kid’s pool, aqua fountain,
playground, BBQ terrace, fitness alcove, gym &
yoga, billiards room, karaoke room, reading room
and function room
Vinschool – system from kindergarten through high
school, shophouses, boutiques, supermarkets,
restaurants, historical museums, playgrounds,
swimming pools, BBQ areas, outdoor gym &
fitness, Vinmec Central Park Hospital, 1.2-km yacht
berth, etc.
Location/
Accessibility
The Nassim is located in Thao Dien, an exclusive
area surrounded by low-rise private residences and
bungalows. The area has become popular among
affluent Vietnamese and the expatriate community.
Residents can benefit from all amenities including
international schools, Vincom Mega Mall, F&B
outlets and medical centres. The upcoming
metro station (An Phu) will further enhance the
accessibility of the location.
Existing: Located alongside the Saigon River in the
heart of District 1, residents have easy access to
the CBD by main roads: Ton Duc Thang, etc. Thu
Thiem Bridge connects the old CBD (District 1) and
the new CBD Thu Thiem.
Future: The 1st metro line scheduled to open in
2020 and will run through the development. Ba Son
station will be built below ground, making it easier
for residents to get to other parts of the city.
14 JLL
About the author
Regina Lim
National Director
Advisory & Research, Capital Markets
[email protected]
+65 6494 7068
Linh Tran
Senior Analyst
Capital Markets, Singapore
[email protected]
+65 6494 3770
Ho Chi Minh City trip report: The opportunity lies in building homes 15
www.jll.com/asiapacific
Jones Lang LaSalle
© 2016 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.