The Ho Chi Minh City eople’s Committee will auction nine land plots located at the functional area I of Thu Thiem New Urban Area, to lure more foreign investment to the already bustling real estate scene in the city. 

The representative of the Ho Chi Minh City People’s Committee released that after receiving the approval of its chairman, the city decided to organise an auction to select investors for nine land plots in Thu Thiem New Urban Area with the starting price of VND27 trillion ($1.18 billion).

The city issued five criteria for interested investors. Accordingly, participants will have to ensure to develop the real estate projects on schedule.

The second is that investors must have sufficient management capacity.

The third is that they will have to participate in infrastructure development projects for neighbouring projects.

The fourth is that they will have to pay deposit to guarantee not quitting from the projects and the fifth is a proven financial capacity as well as the capacity to mobilise capital to develop the projects.

Thu Thiem New Urban Area is located to the east of the Saigon River, facing District 1, with a total area of 657 hectares. It is expected to be a new centre of finance, commerce and services, along with culture and entertainment in Ho Chi Minh City.

Numerous foreign and local investors expressed interest in implementing projects in Thu Thiem New Urban Area. Most recently, in a working session with city leaders, CEO of Lotte Asset Development Lee Kwang Young released plans to start construction of a smart complex in the new urban area on September 2–the National Independence Day of Vietnam.

The smart complex, covering 7.54 hectares, is set to cost VND20.1 trillion ($885.5 million), excluding compensation and site clearance expenses.

Roads and infrastructure inside the complex and connecting to other areas in Thu Thiem will also be constructed under the project.

The project is scheduled to be carried out in 72 months following the approval of the city and will be operated for 50 years by Lotte. Once completed, the smart complex will play a significant role in the development of the Thu Thiem area, which will become the city’s multifunctional finance-trade-service and residential centre.

With the support from the city authorities, the developer will finish the necessary procedures to be able to start the project on time.

Along with Lotte Asset Development, other investors have plans to develop projects at the new urban area. Notably, Ho Chi Minh City Infrastructure Investment JSC (CII) plans to co-operate with Hongkong Land to develop the $400-million Thu Thiem River Park complex.

In March, the two parties signed an agreement to develop the project. Accordingly, the project will provide around 1,140 units, including luxury apartments, sky villas, and garden apartments. The project was designed and arranged intelligently with a variety of unit sizes ranging from one to four bedrooms and scenic views on the Saigon River and surrounding green areas.

The project will launch sales from October this year and will be completed in December 2021.

In general, Ho Chi Minh City is still considered an ideal destination by foreign real estate investors, especially after it has recently completed the traffic infrastructure for suburbanisation.

Numerous real estate projects received investment or were transferred last year.

One of the outstanding transactions was made by CapitaLand Group which purchased a 0.6-hectare piece of commercial land in downtown Ho Chi Minh City to build Vietnam’s first international A-class complex. The project will receive more disbursement from a $500-million investment fund committed by Singaporean developers last November.

CapitaLand also announced the acquisition of a 90 per cent stake in a 0.8-hectare project in Thao Dien, Ho Chi Minh City to build more than 300 apartments.

Another Singaporean developer, Keppel Land, paid VND846 billion ($37 million) to raise its share to 16 per cent in the Saigon Center project in the city centre.

In another popular residential area in District 7, local group An Gia and its Japanese partner Creed Group continued their takeover of five apartment blocks in the La Casa project with a VND-910 billion (around $40 million) deal.

The city has been developing traffic infrastructure to lure more foreign investors to the city, especially in the real estate sector. Notably, the budget for infrastructure development to ease traffic jams was more than VND11.3 trillion ($497.2 million) in 2017, with the cumulative value of VND20.6 trillion ($906.4 million) in 2016-2017, exhausting 33.6 per cent of the 2016-2020 budget. The city has VND40.7 trillion ($1.79 billion) left in the budget for infrastructure development during 2018-2020.

Strict conditions set for investors of Thu Thiem’s prime sites

Any investors joining the auctions of land at nine prime sites totaling some 7.8 hectares in Thu Thiem new urban area in HCMC’s District 2 must satisfy strict requirements concerning capital, legal compliance, implementation progress and deposits when they win the right to develop the sites. 

Vo Van Hoan, head of the office of the HCMC government, told a news briefing on May 2 that such conditions are aimed to ward off incapable investors. The city’s stance is to put land sites up for auction from now on to find capable investors.

In particular, investors wanting the nine land sites in functional area No. 1 in Thu Thiem must have a business registration certificate or a document of equivalent value; be financially capable to implement the projects on schedule (with equity no less than 20% of total investment cost); be able to mobilize capital with at least 80% of total investment capital, and having no accumulated losses as of last year.

In addition, such investors must also be experienced in project management; and commit to have capital for technical infrastructure and roads leading to the nine sites.

The investors are required to have a detailed plan to implement and finish the projects in no more than 60 months from the date of winning the auctions. They must also place deposits to carry out the projects after the auctions. 

According to Hoan, it is not true that the investors can do whatever they want on the sites, but instead must do what is planned by the city.

With such conditions, there is a possibility that foreign investors will be invited to participate.

Investments of the nine sites are estimated at VND27 trillion, including investment costs, land use fees and infrastructure costs. 

Thu Thiem new urban area covers 657 hectares opposite District 1 across the Saigon River. Under the zoning plan of scale 1/2000, the area’s center is divided into five main areas, including the core area, the northern residential area, the residential area along Mai Chi Tho road, the eastern residential area and the southern area.

VIR/SGT