Wednesday, January 09, 2008

Vietnam's Saigon/HCM City property market booming

HCM City’s property market abuzz
17:36' 08/01/2008 (GMT+7)

VietNamNet Bridge - Many foreign investors are reluctantly living in HCM City’s hub because industrial zone developers are not providing the services and accommodations necessary for foreign investors to live nearby.

As the Government is considering their plan to allow foreigners to buy property and houses in Vietnam, it is forecast that the property market will boom further if they approve it. Some real estate companies have kicked off luxury apartment projects in some industrial zones in HCM City, to prepare for this.

Convenience and proximity

Since 2004 more than 80,000 foreigners have come to Vietnam. Of these, around 25,000 invest in the country and 54,000 work in the education, health and business sectors. HCM City and Hanoi host the highest numbers of foreigners, followed by some southern provinces featuring many industrial zones, like Binh Duong, Dong Nai and Ba Ria – Vung Tau.

Kim Thanh, a Taiwanese cosmetics businessman, said before coming to Vietnam, besides learning about the business environment, he had to seek a house. After around ten days looking in newspapers and through real estate brokerage centers, he rented a home for $2,000 a month.

“Our plant is located in Bien Hoa Industrial Zone (Dong Nai province), so initially I intended to live either within the zone, or nearby, but the living conditions for businessmen there were very poor so I had to hire a house in HCM City,” the Taiwanese investor said.

Many foreign businessmen have faced the same dilemma as Kim Thanh. Though they work in industrial zones in Binh Duong, Dong Nai or Ba Ria – Vung Tau, they still choose to live in HCM City and accept the commute between the City and their workplaces.

They also say the industrial zones and surrounding areas have little or no entertainment. Additionally, many bring their families so a top priority is finding a house located near good hospitals and schools.

A representative of a Malaysian estate firm, which is building a luxurious apartment block in Binh Duong, said accommodations at most of industrial zones in the south don’t meet the need of foreign investors and experts.

He said foreign investors told him that they are reluctantly to live in HCM City’s centre. They don’t like to work in a province and live in another city because of it takes more time for travel, plus other troubles such as traffic jams, flood, etc. But HCM City is the only address in the south for them since it supplies all services they need.

Thao Dien in District 2, Phu My Hung in District 7 and luxurious apartment blocks in HCM City’s centre are the top choice of foreigners. Despite high rental fees, it is difficult for a foreigner to hire a house in these locations.

New projects

Understanding the demand of foreigners and to prepare for a new age of the real estate market when the Government approves the scheme that allows foreigners to buy house in Vietnam, some estate companies have kicked off high-class apartment projects near industrial zones.

For instance, Tan Duc Investment Joint Stock Company, a subsidiary of Tan Tao Group, recently began the second phase of a construction project worth several trillion VND in Duc Hoa District, Long An Province. The Northwestern Residential Area Management also kicked off a VND4 trillion project in Cu Chi district, HCM City.

Both investors said they will spend a large part of capital on high-class apartment blocks for foreigners, with schools, hospitals, hotels, and entertainment zones around.

The largest is the US$58 million The Canary residential area in the Vietnam – Singapore Industrial Zone in Binh Duong, which meets international standards.

Lawrence Peh, General Director of GuocoLand Binh Duong, the investor, said The Canary consists of 1,200 apartments, a modern shopping mall, an international school, a hotel, a golf course and an entertainment and sports zone. He confirmed that this project is for foreigners and Vietnamese who are working inside and near the Vietnam Singapore Industrial Zone.

According to the Ministry of Construction, Hanoi has around 220,000sq.m of housing (equivalent to over 1,300 apartments) leased to foreigners, while HCM City has 660,000sq.m or nearly 4,000 apartments.

The average rent in Hanoi is between $700 - $1,000 per month and $1,000 to $1,500 per month in HCM City. In central areas, the price is $2,000 to $3,000 per month.