Ho Chi Minh City trip report: The opportunity lies in building homes - Aug 2016 - The Investor JLL
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Ho Chi Minh City trip report: The opportunity lies in building homes Aug 2016
Vietnam is one of the fastest growing countries in Southeast Asia. Demographics and a rising middle class
In 1H16, Vietnam’s GDP grew by 5.5%, and is expected to grow
Vietnam’s population has grown rapidly from 66 million in 1990 to
6.0-6.5% in 2016-2020. Ho Chi Minh City GDP growth has been
91 million in 2016. This makes Vietnam the third populous country
faster than Vietnam, at 7.5% in 1H16.
in Southeast Asia after Indonesia and Philippines. While the birth
The strong economic growth is a result of favourable demographics, rate is low at 2.09, internal migration from the countryside to urban
continued urbanization, industrialization and higher employment in areas will drive urban population growth. The World Bank expects
the services sector and a rising middle class. Vietnam’s urban population to grow by 2.4% per annum till 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 2.6%
6 2.5% 2.3%
2.2% 2.2% 2.2%
5 2.0% 2.0%
1.9% 1.8%
4 1.6% 1.6% 1.5%
1.5%
3
2 1.0% 0.9%
1 0.5%
0
05 06 07 08 09 10 11 12 13 14 15 6E 7E 8E 9E 0E 0%
20 20 20 20 20 20 20 20 20 20 20 201 201 201 201 202 Vietnam Indonesia Thailand Malaysia Philippines Singapore
ASEAN 6 Vietnam 2010-15 2015-20 2020-25
Source: IMA Asia Source: World Bank
2 JLL
Over the next two decades, Vietnam will be in a demographic Employment in the services sector
golden age. Employment in manufacturing and services has
Vietnam’s economy is still immature, with about 47% of employed
increased 25% of the population is aged between 10 and 24; the
persons still working in the agriculture, fishery and mining
median age is around 30. According to the Brookings Institute,
sectors, compared to 28% in Southeast Asia. Employment in the
Vietnam has the fastest-growing middle class in Southeast Asia –
manufacturing and services sectors has increased substantially
18% per annum over the period 2016-20, accelerating from 15%
in the last two decades. Employment in the services sector has
per annum in 2005-2015.
increased from 19% of the workforce to 32% of the workforce in
Vietnam. We expect this to continue to rise in the next 10 years,
boosting income growth.
Fig 3: Growth of middle class population Fig 4: Percentage of employed persons in the services sector
20% 80
18% 70 70 71
16% 60
60
14% 54
12% 50 48
45
42
10% 40 38 38
8% 30 32
30
6%
20 19
4%
2% 10
0% 0
Vietnam Indonesia Philippines Thailand Malaysia Singapore Indonesia Malaysia Philippines Singapore Thailand Vietnam
2005-2015 2016-2020 1996 2015
Source: Brookings institute 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 currently has about 80,000 apartment units. The high supply in the pipeline is a result of strong sales in 2015
Affordable, mid-end and premium apartments make up 43%, 42% and 1H16, where developers sold 24,000 units and 16,800 units
and 15% of the stock respectively. respectively, 250% higher than the sales rate in 2011-2014. In
2011-2014, premium and luxury apartments made up just 10% of
In the next three years, based on the private apartment units that apartment sales, but in 2015 and 1H16, these made up 27% and
have been launched for sale, the stock could increase by 74%. For 44% of apartment sales respectively.
premium and luxury apartments above USD2,000 psm, the stock is
expected to double.
Fig 5: Apartment units in Ho Chi Minh City Fig 6: Apartment sales in Ho Chi Minh City
160,000 30,000
140,000
25,000
120,000
20,000
100,000
+74% 15,000
80,000
60,000 10,000
40,000 +62% +72%
5,000
20,000 +110%
0 0
Affordable Mid-end Premium Luxury Ho Chi 2011 2012 2013 2014 2015 1H16
Minh City
2Q16 stock Including launched units Affordable and mid-end Premium/Luxury
Source: JLL Source: JLL
4 JLL
Why are sales so strong? As confidence in the economy grew, interest in property investment
was revived. In Nov 2014, regulatory changes were made to allow
We believe investment into the residential market picked up
foreigners to buy up to 30% of any single condominium building
momentum in 2015 due to stronger economic fundamentals as well
or a maximum of 250 houses in any one administrative ward. This
as regulatory changes. Since 2011, Vietnam has attracted strong
was implemented in Jul 2015. Foreigners will be able to own the
foreign direct investment into the manufacturing sector as it became
property for 50 years and enjoy the same rights to lease, transfer
a lower cost alternative to China. Vietnam’s exports grew by 16%
or sell the property. Foreigners may extend their home ownership
annually on average in 2011-2016, compared to just 6% for China.
after 50 years, subject to approval. This further stimulated investor
As the trade deficit narrowed after 2011, the Vietnamese dong interest in Vietnam property.
stabilised at 21,000/USD 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 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%
-20% 0
2009 2010 2011 2012 2013 2014 2015 2016E 2009 2010 2011 2012 2013 2014 2015 2016E
Vietnam China China Vietnam
Source: IMA Asia Source: IMA Asia
Fig 9: Trade balance and export growth Fig10: Inflation and interest rate
40% 2,000 25% 24,000
0 23,000
30% 20% 22,000
-2,000
20% 21,000
-4,000 15%
20,000
8%
10% -6,000 19,000
10%
-8,000 8.5% 18,000
0%
-10,000 5% 17,000
-10% 16,000
-12,000 1.4%
2016E
2017E
2019E
2018E
0% 15,000
2008
2009
2010
2012
2013
2014
2015
2011
-20% -14,000
2008
2009
2010
2011
2012
2013
2014
2015
2016E
Trade balance Export growth Import growth
USDm(RHS) USD USD Inflation rate Lending rate VND/USD (RHS)
Source: IMA Asia Source: IMA Asia
Ho Chi Minh City trip report: The opportunity lies in building homes 5
Is there any oversupply in the residential market? Despite the strong sales volume in 2015 and 1H16, premium
apartment prices have risen by just 9% in the last six quarters. We
While the residential supply is expected to grow by 74% over the believe this is due to the range of choices developers have rolled
next three years, we think the market will be able to absorb it. out, creating strong competition. Sales rate has stayed strong at
60-70% in 2015 and 1H16, compared to 30% in 2010-2014.
The current stock of apartments relative to Ho Chi Minh City’s
population is low compared to other Southeast Asian countries, In contrast, prices rose 106% in 2005-2007 when strong foreign
even after the units that have been launched are developed. The capital flowed into Vietnam in anticipation of a strong recovery
government is seeking ways to encourage developers to undertake in the economy and the property market. During this period,
more affordable housing projects to meet the housing needs in the developers sold around 1,500 units per year, achieving a sales rate
city. of 65%. Prices have corrected by 30% over seven years in 2007-
2014. Thus, the premium apartment price of USD2,180psm is still
However, the supply of premium and luxury apartments seems to
24% below the 2007 peak.
be high, especially after the supply in the pipeline is completed.
We estimate that Ho Chi Minh City could have close to 3 prime Further, apartment rents rose 4% in the last six quarters, keeping
apartments per 1000 persons, close to the average in Bangkok, market yields relatively stable at 5.7%. The gap between rental
Kuala Lumpur and Manila, but higher than Jakarta. yield and borrowing cost has narrowed from 880bps in 2008 to
280bps in 1H16. As the supply in the pipeline gets completed in the
Will home prices continue to rise?
next 3 years, there may be downward pressure on rents and yields.
We expect overall apartment prices to rise by 5-7% p.a. However, given the low inflation experienced in 2015-16, there is
in the next three years, supported by strong absorption scope for interest rates to continue to fall, supporting prices.
and affordability levels. Mid-tier and affordable apartment
prices could rise by up to 10% p.a.
Fig 11: Apartment stock per 1000 persons, 4Q2015 Fig 12: Prime apartments per 1000 persons, 4Q15
50 4.0
45 3.5
40
3.0
35
30 2.5
25 2.0
20 1.5
15
1.0
10
5 0.5
0 0
HCMC in HCMC in Jakarta Bangkok Kuala Manila HCMC in HCMC in Jakarta Bangkok Kuala Manila
2015 2019 Lumpur 2015 2019 Lumpur
Source: JLL Source: JLL
Fig 13: Ho Chi Minh City premium apartment price USDpsm Fig 14: Ho Chi Minh City premium apartment rent and yield
3,000 19% 200
180
2,500
14%
160
2,000
140
9%
1,500 120
4% 100
1,000
12
13
14
15
16
09
10
11
08
20
20
20
20
20
1H
20
20
20
05
06
07
08
09
10
11
12
13
14
15
16
Net effective rent Market yield Borrowing cost
20
20
20
20
20
20
20
20
20
20
20
1H
Primary Secondary USDpsm (RHS)
Source: JLL Source: JLL
6 JLL
Are apartments affordable and is the market growth Table 1: Ho Chi Minh City apartment prices
sustainable? Apartment 2Q16 price Yoy Apartment Home price to
type USD psm change price USD income ratio
We believe Ho Chi Minh City apartments are still affordable
compared to income levels. Based on the top quintile household Affordable 827 7.90% 62,025 3.9
Mid-end 1,414 4.60% 106,050 6.6
monthly income of USD1,337, private apartments in the affordable
Premium 2,192 8.70%
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 Luxury 3,925 -3.10%
income ratio of 3.9 years is 30% lower than the average of 5.7 Source: JLL
years amongst other Southeast Asian cities.
Fig 15: Home price to income ratio for Southeast Asian cities
Even if prices rose 30% over the next three years, it is likely that the
8.0
home price to income ratio would be stable given that incomes have 7.0 7.0
been rising at c.10% annually in the last few years. In the last 5 6.0 5.7 5.9
5.3 5.6
years, home prices in Ho Chi Minh City have declined amid income 5.0
growth, bringing home price to income ratio from 7.6 years in 2010 4.0 3.9
to 3.9 years in 2015. 3.0
2.0
According to the World Bank, urban households in Vietnam
1.0
have a median monthly income of USD460 while the top quintile
0
household has a monthly income of USD1,340. Based on this, HCMC Kuala Bangkok Singapore Jakarta Manila
only households in the top 20th percentile can afford mass market Lumpur
Source: JLL
apartments built by commercial developers.
Fig 16: Apartment price USD
For households outside of this income bracket, the government has
80,000 8.0
launched a 30 trillion stimulus package from June 2013 to extend
affordability to middle income households by lowering mortgage 70,000 7.0
7.6
rates to 5% compared to market rates of 7.5-10.0%. The subsidy is 60,000 6.0
6.4
stated to apply to social housing or apartments built by commercial
50,000 5.5 5.0
developers that are smaller than 70 sqm and cost less than
VND15m psm (or USD673 psm). 40,000 4.4 4.0
4.0 3.9
30,000 3.0
Since the program started, loan growth reached 13% in 2014, 18%
in 2015 and is likely to be 18-20% in 2016. Our discussions with 20,000 2.0
developers in Ho Chi Minh City indicated that 50-80% of apartment 10,000 1.0
buyers are taking on a mortgage for 50-65% of the apartment price 0 0
and loan tenures range from 15 to 20 years. The adoption of home 2010 2011 2012 2013 2014 2015
loans is much higher than 2011 where majority of buyers use cash Home price to income ratio (RHS) Apartment price USD
for apartment purchases. Source: JLL
Table 2: Urban incomes in Vietnam by quintile and housing affordability with and without the 30 trillion mortgage program
Income Monthly income Monthly Loan amount Down Down Affordable home Apt size USD psm
quintile VND ‘000 income USD USD payment payment USD price USD
Q5 29,805 1,337 51,794 30% 22,198 73,992 75 987
Q4 14,272 640 18,601 20% 4,650 23,252 70 332
Q3 10,313 462 10,172 20% 2,543 12,715 70 182
Q2 7,322 328 4,767 0% 4,767 70 68
Q1 3,982 179 1,607 0% 1,607 70 23
With 30 trillion program
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: Foreign Direct Investment into Vietnam
80000 2500
Several developers we spoke to in Ho Chi Minh were conscious of
the property and stock market bubble in 2008. However, we find 70000
2000
that current conditions are not as effervescent as conditions in 60000
2007-2008. 50000 1500
40000
Foreign direct investment into Vietnam in 2014 and 2015 were 1000
30000
stable compared with 2010-2013 and most of the capital inflow was
deployed into projects. In contrast, the capital inflow to Vietnam in 20000
500
2007 was triple that of 2005, and in 2008, capital inflow rose 3 times 10000
in a year. Most of the capital was not deployed into projects. While 0 0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012
2013
2014
2015
2011
capital inflow in 2008 was 6 times higher than 2005, the number
of projects implemented was just 10% higher in 2008 compared to Total refistered capital (Mill. USD) (*) Number of projects
2005. Implementation capital (Mill. USD)
The Vietnam stock index has also been stable in 2014-15, rising Source: General Statistics Office Vietnam
15% over two years. In the last 12 months, the index rose 3%. Fig 18: Vietnam Stock index (July 2000 - July 2016)
In contrast, the Vietnam stock index rose 144% in 2006 and 56% in 1,000
1Q2007 as the market priced in expectations of high GDP growth 800
upon Vietnam’s World Trade Organization (WTO) accession,
600
positive operating results from listed companies, and increasing
Price
foreign portfolio investments. Rising concern over the risks of an 400
overheating stock market prompted the State Bank of Vietnam to 200
cap securities investments and hike interest rates 3 times from 0
8.75% to 14% in 1H2008. Subsequently, deposit interest rate rose
Volume
to 16-18% while loan at 20-21%. In the first 6 months of 2008, the 200M
VN-Index fell by 60%. 0M
02
03
04
05
06
07
08
09
10
12
13
14
15
16
11
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
2004 2008 2012 2016
Source: https://www.vndirect.com.vn/portal/cong-cu-phan-tich-chung-
khoan/bieu-do-ky-thuat.shtml
8 JLLShould 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 are much lower than premium
projects so competition for buyers will be less intense.
However, acquiring good land plots which 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.
We believe the strong office absorption tracks employment growth
in the services sector. In the last ten years developers are likely to
build more apartments along the new metro line that is scheduled
to be completed in 2020. Construction of the first metro line in
HCMC commenced on 28 August 2012, connecting Ben Thanh
Market to Suoi Tien. The line is expected to consist of 14 stations,
covering 19.6km, of which 2.2km 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 Thu Thiem and Thao Dien area.
Tan Son Nhat
ong
Airport Van
D Binh Loi
Pham Binh Trieu
Bridge
Bridge
on River
QL13
Sai G
The Nassim
Truong Son
Bach Dang
ien -Suoi Tien
Giu oc Thao D 1: Ben
Thanh
– Can Vo Metro
Hoang Van Thu
ang Lu
u
Phan D: Sai Gon
Bridge Nguy
en
Tan Cang Hano i H ig h way
5 Gia
Metro p
Van Sai Gon
Thanh Bridge
h
Tin
u y en Huu Canh
he
t Ng
Vie
Xo
Ph
an
u
Ng
Ph
Ng
Di
uy
nh
ien
en
Ph
B
Bi
en
un
nh
Di
g
Kh
Di
iem
nh
Tie
nHo
an
Thu Thiem
ai
g
Kh
Bridge
inh
Ba Son
iM
Th
en
Tran
Ha
uy
iB
Ng
Na aT
Vinhomes
Van
m ru o
Ky ng i Th
Mu hea
i Ch
K
Kh Golden River
he
oi Ma
nic ter
T
Ng
hia
ipa
l
Ton Duc Than
Thu Thiem
Ng
uy
Tunnel
i
Lo
en
g
Le
H ue
Ben Thanh Market Ham Nghi
Ho Chi Minh City trip report: The opportunity lies in building homes 9Ho Chi Minh City office outlook
Based on JLL’s data, there were no new Grade A office buildings In the last ten years, employment in the financial, insurance, real
developed in 2000-2008. In the last six years, the stock of Grade A estate and business services sectors in Vietnam has grown by 11%
office buildings increased by 200% with the completion of Kumho per annum to 3.64 million in 2014, prompting annual occupied office
Asiana Plaza, Vincom Center, Bitexco Financial Tower, Times space expansion of 9.6% on average.
Square and Vietcombank Tower. This brought the stock of Grade A
net lettable office space to 220,000sm. Over the next ten years, we expect demand for office space to
continue to grow strongly by 8-10% annually in Ho Chi Minh
While Grade A office occupancy rate fell to 63% immediately after City as the economy develops. We expect the proportion of the
the completion of Vincom Center and Bitexco Financial Tower population employed in services rises from 30% to 40%, and annual
in 2010, the space was gradually taken up in 2011-1H2015 and GDP growth of 5.5-6.0%.
occupancy rate recovered to 93%. The office market has become a
landlord’s market due to limited supply of office spaces over 1,000 This provides a great opportunity for developers to
sm until 2H2017 while demand continues to be strong. 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 sector
Grade A office space 1000 sm millions
120 4.0 200
3.5 180
100 100% 160
3.0
140
80 2.5
90% 120
60 2.0 100
80% 80
40 1.5
60
70% 1.0
20 40
0.5 20
0 60%
0 0
2016E
2017E
2018E
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
05
06
07
08
09
10
11
12
13
14
-20 50%
20
20
20
20
20
20
20
20
20
20
Employment in finance and business services
Ch in stock Ch in occupied stock Ocupancy rate Occupied office space ‘000sm (RHS)
Source: JLL Source: Vietnam General Statistics Office
10 JLLCompared to the other Southeast Asian cities, GDP per capita of developed cities. While Ho Chi Minh City prime office market yield
USD2,100 in Vietnam still lags and as a result, office stock per at 8.5-9.5% is high, the spread above cost of debt is thin at 150-
capita in Ho Chi Minh City is still low. With just 1.7m sqm of office 250bps. In contrast, investment yields in Bangkok, Manila or Kuala
space, Ho Chi Minh City’s office stock is less than half of the stock Lumpur provide 300-400bps spread over the cost of debt.
in Jakarta, Kuala Lumpur, Bangkok and Manila.
We believe this is symptomatic of a fledging city in the early
Rents and capital values seem expensive due to stages of development. Before the development of sufficient
lack of significant stock stock of suitable office buildings for international companies,
rents and capital values end tend to be expensive and companies
While office demand is likely to grow faster than the economy, we may operate out of apartments or standalone buildings until
believe office rents and capital values in Ho Chi Minh City are not the city gradually builds more office buildings. However, as the
low. city develops and matures, office rents and capital values may
Currently, Ho Chi Minh City gross effective prime office rent of moderate. In Ho Chi Minh City’s case, the development of the Thu
USD550psm per annum is 40-160% more expensive than other Thiem area across the river from District 1 over the next 10-20
Southeast Asian cities excluding Singapore. Capital values are years could prompt the growth of a new CBD that could more than
similarly high at USD4,900psm, 25-160% higher than these more 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 city (sqm)
60 1.60
56
50 49 1.40 1.37
50 47
1.20
40
1.00
30
0.80 0.72
20 0.64
0.60 0.58
8.5 0.43
10 6.1 0.40
5.4
3.0 2.7 2.1 1.5 0.21
0 0.20
US
e
a
Ma n
sia
Th a
Ind nd
Ph sia
Vi s
am
ia
e
or
ali
pa
in
Ind
0.00
pin
a
lay
e
Ch
etn
ap
str
Ja
ail
on
ilip
ng
Singapore Jakarta KL Bangkok Manila HCMC
Au
Si
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 10.0 20,000
9.0 18,000
1,000
8.0 16,000
800 777 7.0 14,000
600 6.0 12,000
548
5.0 10,000
400 331
304 4.0 8,000
200 279 3.0 6,000
206
2.0 4,000
0
12 2013 14 E E E E 1.0 2,000
10 2011 20 15 15 15 15
20 20 20 20 20 20 0.0 0
Jakarta KL Manila Singapore HCMC Jakarta Bangkok Manila KL
Singapore Bangkok HCMC Price USDpsm (RHS) Market yield 10Y bond yield
Source: JLL Source: JLL
Ho Chi Minh City trip report: The opportunity lies in building homes 11Thu Thiem New Urban Area The area is now connected to district 1 and other parts of the city
via a Thu Thiem tunnel and a new bridge. Four other bridges and a
The People’s Committee of Ho Chi Minh City announced in
metro line are under planning. Upon completion, these will provide
2002 that Thu Thiem will be developed into a new financial and
Thu Thiem with a distinct advantage of a seamless connection
commercial hub of Ho Chi Minh City. Thu Thiem will play a strategic
with the current CBD. The Thu Thiem New Urban Area has been
role in the development of the east side of the city, in which
divided into eight main functional areas. According to the Thu Thiem
several important industrial, social and economic zones have been
Authority, each area, or so called “neighbourhood” is characterized
established. The total land area of the Thu Thiem New Urban Area
by a distinct mixed-use program and density range, as well as
is 657 ha, out of which 215 ha will be for commercial and residential
public spaces and key landmark buildings.
projects, 159 ha for roads and infrastructures, and 281 ha for public
green parks.
The “Core Area” of Thu Thiem is divided into two
neighbourhood known as #1 and #2 (2a, 2b, 2c).
The Northern residential areas consist of #3 and #4
4
3 7 The residential areas along the Mai Chi Tho Boulevard are #5
1 and #6
6 #7 includes the Eastern Residential development, Urban
Resort Hotel and Marina
2a
5
#8 encompasses the entire Southern Delta area.
2b
2c
Major approved projects in the area:
8 • Dai Quang Minh: Lot 5 & 6
• Eco Smart City: Lot 2a
• Empire City: Lot 2b
12 JLLMajor projects in Thu Thiem New Urban Area
Dai Quang Minh Eco Smart City
In December 2014, Dai Quang Minh Real Estate Investment South Korean conglomerate Lotte and its Japanese partners,
JSC entered an agreement with the People’s Committee of Ho Mitsubishi and Toshiba, have announced the construction of a
Chi Minh City, under which the company committed to build four US$2.2 billion Eco Smart City project in Thu Thiem to kick off in July
major roads in Thu Thiem New Urban Area with an estimated cost 2016.
of US$550 million. In exchange, Dai Quang Minh was given the Covering an area of 16.71 hectares, the complex features a luxury
right to develop an 80-ha urban area in Thu Thiem that includes trade centre, office buildings, hotels, serviced apartments, and
luxurious residential, office, school and hospital. The estimated cost multifunctional condos, with a highlight of a 50-storey building.
of development is US$85 million.
Empire City
Empire City is a 14.5 hectares project located just next to
the mouth of 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 square meter with a total
investment of US$1.2 billion. The construction commenced
in October 2010 and is expected to complete its 4 phases in
2022.
In March 2016, Keppel Land entered into an agreement to
subscribe for 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 13Details 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, 2 Ton Duc Thang, D1, Ho Chi Minh City
District 2, 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 3000 units;
and 63 villas with area ranging from 225 to 475sqm
Completion 2Q 2018 December 2017 (Phase 1)
Built Ratio - 18.6%
Unit Mix 1BR: 50 – 52 sqm; 2BR: 77 sqm Officetel: 1BR 42-45 sqm; 2BR 62– 68 sqm;
3BR: 108 – 123 sqm; 4BR: 140 – 146 sqm Apartment: 2BR 72-85 sqm; 3BR 92-114 sqm; 4BR
Penthouse: 408 – 463 sqm 146-150 sqm
Indicative Pricing Starting from US$3,000 psm - 20% to 30% higher US$3000 – US$6000 psm
than competition in the area US$150,000 – US$700,000 per unit
Payment Scheme • Refundable registration fee: VND 50 mil • Deposit: 200 million VND (~S$12,000),
• 1st deposit: VND 50 mil; 2nd deposit 7 days after Down payment: 20% / 30%
1st deposit: 10%; 3rd deposit at completion of • 1st 6 months: 40% / 30%, 2nd 6 months: 10%,
pile cap: 10% • Handover (Dec-2017 onwards): 25% plus
• 1st instalment upon foundation completion: 10%; maintenance fee (2%) and tax of 5% of unit
2nd and 3rd instalment every 2 months: 20% value;
(10% each) + tax • Receiving of ownership certificate: 5%
• 4th instalment upon condo handover (2Q 2018): For mortgages, LTV could go up to 75% with
45%, plus 2% management fees and tax interest support from the developer for 8-20 months
• Upon issue of ownership title: 5% + tax
Buyers Profile Reached 30% limit on foreign buyers 80% local, 20% foreigners (mostly South Koreans
and Chinese)
Facilities 25m lap pool, aqua deck with loungers, feature Vinschool - system from kindergarten through high
cabanas, Jacuzzi, kid’s pool, aqua fountain, school, shophouses, boutiques, supermarkets,
playground, BBQ terrace, fitness alcove, gym & restaurants, historical museums, playgrounds,
yoga, billiards room, karaoke room, reading room swimming pools, BBQ areas, outdoor gym &
and function room. fitness, Vinmec Central Park hospital, 1.2 km yacht
berth, etc.
Location/ The Nassim is located in Thao Dien, an exclusive Existing: Located alongside the Sai Gon River at
Accessibility area surrounded by low-rise private residences and the heart of district 1, residents have easy access
bungalows. The area has become popular among to the CBD by main roads: Ton Duc Thang, etc. Thu
affluent Vietnamese and the expatriate community. Thiem Bridge connecting the old CBD (district 1)
Residents can benefit from all amenities including and the new CBD Thu Thiem.
international schools, Vincom Mega mall, F&B Future: the 1st metro line scheduled to open in
outlets and medical centers. The upcoming metro 2020 will run through the development. Ba Son
station (An Phu) will further enhance accessibility of station will be built below ground, making it easier
the location. for residents to get to other parts of the city
14 JLLAbout the author
Regina Lim Linh Tran
National Director, Advisory & Senior Analyst
Research, Capital Markets Capital Markets, Singapore
Regina.Lim@ap.jll.com Linh.Tranthuy@ap.jll.com
+65 6494 7068 +65 6494 3770
Ho Chi Minh City trip report: The opportunity lies in building homes 15www.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.
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