I NT R O D UCTIO N

JOURNEY TO THE EAST:

PA RT 1:

The Residential Market

C BRE RESEARC H | SEPTEMB E R 2 0 2 0

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 1
PART 1: THE RESIDENTIAL MARKET

6.
4.

I
CONTENTS

ntroduction

E xecutive
Summary

2 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t

 16.
20.
onclusion

12.
F
uture
Developments
in The
Eastern City

30.

I
ase
Studies

mpact
on the
Residential
Market

Note: The East of HCMC includes District 2, District 9, Binh Thanh District and Thu Duc District .

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 3
PART 1: THE RESIDENTIAL MARKET
1.
Executive
Summary
In May 2020, the Ho Chi Minh City Department of
Home Affairs issued proposal No. 1932 / TTr-SNV
detailing a comprehensive development plan for all
districts and wards in Ho Chi Minh City (HCMC).
The proposal calls for the merger of Districts 2, 9
and Thu Duc in East HCMC to create a new and
independent administrative entity informally dubbed
“The Eastern City” or “Thu Duc City”, to complement
and coexist with HCMC.
New infrastructure currently under construction will
facilitate the linkage of The Eastern City with the rest
of HCMC. Projects already underway include Metro
Line No. 1 - a 19.7 km mass transit line connecting
Ben Thanh Station in District 1 to Long Binh Depot in
4 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t
District 9, which is due to be completed by the end
of 2021 - and Thu Thiem Bridge No. 2.
There has been a significant increase in real estate
development and investment in the areas that
will eventually form The Eastern City. Developers
began to acquire sites near the site of future metro
stations several years ago, with residential proper-
ties attracting no shortage of interest from investors
and end-users. Between 2015-2020, within the
high-end segment, price increments of residential
properties in District 2 surpassed HCMC’s average
by 2%, with significant potential for additional
growth.
Part 1 of this Special Report by CBRE explores the
impact of the eastern expansion of HCMC
metropolis and the creation of The Eastern City on
the residential market and identifies opportunities
for residential developers, investors and end-users.
Subsequent parts of this report to be released in
the coming months will focus on the impacts for the
office, retail and hotel sectors.
 E X E C UT I VE S UMMA RY

Between 2015-2020, residential

sales prices in District 2 increased
by an average of 7.3% per year
for the high-end segment, well
beyond the citywide average.
There is still significant room for
appreciation thanks to the huge
potential of this area.

Residential supply in The Eastern City is expected to grow at

an annual rate of 11.5% between 2020-2025, equivalent to
15,000-16,000 new units per year on average, exceeding the
South (4.6%) and the West (5.3%).

The addition of new infrastructure connecting The Eastern City

with the rest of HCMC and subsequent development of new res-
idential projects in the area have led to a surge in land prices
across many areas.

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 5
PART 1: THE RESIDENTIAL MARKET

2.
Introduction
A
long with Dong Nai, Binh
Duong, Ba Ria – Vung Tau,
Binh Phuoc, Tay Ninh, Long
An and Tien Giang Provinces,
HCMC comprises part of Vietnam’s
Southern Key Economic Zone. In
recent decades, HCMC has made
considerable progress in socio -
economic development and
established a prominent role for
itself within this zone, whilst also
extending commercial and
economic support to neighbouring
provinces.

6 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t


THU DUC
CBD
HO CHI MINH
CITY
A
ccording to the HCMC Master Plan up to
2025, the future development of HCMC
will be directed to the east and south. In
the east, the construction of several major new
infrastructure projects will help create a Transit-Oriented
Development (TOD) corridor from the HCMC Central
Business District (CBD) to the East and to Dong Nai
province.
The plan to develop the east recently received a
major boost from the Ho Chi Minh City Department
of Home Affairs’ issuance of proposal No. 1932/
TTr-SNV, which features a comprehensive development
plan for all districts and wards in HCMC.
The proposal calls for the merger of Districts 2,
9 and Thu Duc in the east to create a new and
independent administrative hub to complement
and coexist with HCMC – an entity that has been
dubbed “The Eastern City”. Within this area,
District 2 has been designated HCMC’s new
administrative and financial centre; District 9 will be
established as the city’s technology hub; and Thu Duc
District will be an education hub.
Owing to its strategic location within the “The
Golden Triangle” of HCMC, Binh Duong and Dong
Nai provinces, The Eastern City will play a key role in
linking HCMC with adjacent provinces in terms of both
transportation and economic activity.
I NT R O DUCTIO N
DIST. 9
DIST. 2
The Eastern City
New infrastructure currently under construction will
facilitate the linkage of The Eastern City with the rest
of HCMC. These include Metro Line No. 1 - a 19.7
km mass transit line connecting Ben Thanh Station in
District 1 to Long Binh Depot in District 9, which is due
to be completed by the end of 2021 - and Thu Thiem
Bridge No. 2.
Since construction of Metro Line No. 1 began in 2012,
many residential and retail developments have been
built adjacent to the route, especially on the Hanoi
Highway at Thao Dien, Binh An and An Phu wards of
District 2.
Other hotspots in The Eastern City include Thu Thiem
NUA, a 657-hectare site located in District 2, which
is now home to numerous major residential projects
such as Sala Dai Quang Minh Township, Empire City,
The Metropole, The River, Thu Thiem Lakeview and The
New City.
As new infrastructure comes online, existing
commercial developments such as Sofic Tower and
Socar Mall - the commercial components of Sala Dai
Quang Minh Township – and new projects in the
pipeline will gain traction and attract more office
and retail occupiers to the area – accelerating the
decentralisation trend witnessed in recent years.
C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 7
PART 1: THE RESIDENTIAL MARKET

HOC MON

DIST. 12

METRO LINES GO VAP 4

HO CHI MINH
of CITY 4

The urban rail-way network comprises six MRT 2 2

lines with a total length of 109 km, together with

two monorail routes and a tramway.
2

TAN BINH
4

1 Ben Thanh – Long Binh Depot: 19.7 km

2
5 5 4
2
6
2 PHU
2 An Suong – Thu Thiem: 19 km 2 NHUAN
5
TAN PHU 2

3 Tan Kien – Hiep Binh Phuoc: 28.3 km 6 2

DIST. 10
5

4 Ben Cat Bridge – Nguyen Van Linh: 24 km

5
6

5
DIST. 11

5 A northern inner semi-loop line BINH TAN

3
3
3 3
3
DIST. 5

6 A north-south section in the western suburbs

5
3 DIST. 6
DIST. 8

5
Note:
Under construction
Under planning 3

Ba Son Station Underground Work

BINH CHANH

8 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t

 I NT R O D UCTIO N

1
1

1
4

3
1

1
3

THU DUC

3
1
DIST. 9

BINH THANH 1
30 KM TO
5 LONG THANH
5 3 INTERNATIONAL AIRPORT
1
4 1
1
1

4 3
3
4 2 DIST. 2
DIST. 1
DIST. 3 3
1 2

2 3 2
1
3
2 1
2 THU THIEM NUA
3

HCMC CBD
3
3

4
DIST. 4

DIST. 7
4

NHA BE
Opera House Station Opera House Station Opera House Station

Source: CBRE Vietnam, Q2 2020.

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 9
PART 1: THE RESIDENTIAL MARKET

Planning for Relocation of

THU THIEM’S Thu Thiem existing
began residents
DEVELOPMENT officially began
TIMELINE

THU THIEM NEW 1996 2002

URBAN AREA
Source: http://www.thuthiem.hochiminhcity.gov.vn

EAST-WEST HIGHWAY
Connecting The West to Thu Thiem
NUA to residential and
commercial districts to the east

THU THIEM BRIDGE NO. 1

Linking Thu Thiem with
Binh Thanh District.
Opened in 2008

THU THIEM BRIDGE NO. 2

Linking Thu Thiem with District 1 (at one
end of Ton Duc Thang Str.) PEDESTRIAN BRIDGE
Investor: Dai Quang Minh Linking Thu Thiem with District 1 (at
Under-construction, set to open in 2021 Me Linh Square)
Investor: Dai Quang Minh
Under Design and Concept Contest

10 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t

 I NT R O D UCTIO N

Thu Thiem Thu Thiem 1/2000 master Thu Thiem Launch of the Four projects providing
Bridge No. 1 Tunnel plan unveiled Bridge No. 2 first residential a total of 5,351 units
opened opened commenced project in Thu were completed. Selling
construction Thiem by Dai prices increase by 95%
Quang Minh compared to 2015.

2008 2011 2012 2/2015 7/2015 2020

FOUR MAJOR ROADS

Total length: 11.9km
Investor: Dai Quang Minh
Construction started in 2014, THU THIEM BRIDGE NO. 4
to be completed in 2021 Linking Thu Thiem with District 7
Under-planning

THU THIEM BRIDGE NO. 3

Linking Thu Thiem with District 4
Under-planning

THU THIEM TUNNEL

Linking Thu Thiem with District 1
Investor: Thu Thiem Authority
Opened in 2011

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 11
PART 1: THE RESIDENTIAL MARKET

3.
Impact on the
Residential Market
C
BRE expects the completion of Metro Line No. 1 and
Thu Thiem Bridge No. 2 to attract young couples,
small households, retailers and office occupiers to
reside, shop and work in The Eastern City. Thu Thiem NUA
will be one of the more vibrant areas, with a substantial
pipeline of new commercial and high-end condominium
projects expected to be built.

12 | CBRE Re se arc h | Vie t n a m Spe c ia l Re p o r t

 I M PA C T O N T H E R E S I D E NT I AL MA RKET

R
esearch in several
markets worldwide has
found that residential
properties within walking distance of metro
stations typically command higher selling prices than those that are not – a price
premium that often emerges well before metro lines and stations are fully completed.

HCMC’s Metro Line No. 1 is expected to be 85% completed by the end of this year, with operations scheduled to
commence in Q4 2021. Once completed, the line will connect Districts 2, 9 and Thu Duc with the HCMC CBD,
and is expected to lead to significant additional price growth. CBRE data show that price growth in The Eastern
City, especially in District 2, began to accelerate after the active construction of Metro Line No. 1 in 2015, while
the number of units sold rose by 4x compared with 2010-2014 period (Fig. 3.1).

Between 2015-2020, residential sales prices in District 2 increased by an average of 7.3% per year for the
high-end segment, well beyond the citywide average, with significant potential for additional growth. Since 2018,
capital gains on the secondary market have been considerable as the metro line nears completion, with current
average asking prices 25%-75% higher than launching prices (Fig. 3.2 and 3.3).

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 13
 PART 1: THE RESIDENTIAL MARKET

Figure 3.1: HCMC Condominium, Sold Units Figure 3.2: HCMC Condominium, Average
by Location Primary Price by Location

6,000

Average primary selling price (US$ psm)

30,000
5,000
25,000
4,000
20,000
Sold units

3,000
15,000
2,000
10,000
1,000
5,000
-
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2
District 2 District 9 Thu Duc District
2020
2004 - 2014 2015 - 2019 An Phu Thanh My Loi Thao Dien Thu Thiem HCMC

Source: CBRE Research, June 2020.

Figure 3.3: HCMC Condominium, Current Price and Launching Price

4,500 90%

Price growth rate (%)

Selling price (US$ psm)

4,000 80%
3,500 70%
3,000 60%
2,500 50%
2,000 40%
1,500 30%
1,000 20%
500 10%
0 0%
Thao Dien Pearl
(2010)

Masteri Thao Dien

(2014)

Gateway Thao Dien

(2015)

The Nassim
(2015)

Lavita Garden
(2015)

Lavita Charm
(2017)

Q2 Thao Dien
(2018)

Masteri An Phu
(2018)

The Estella
(2008)

Cantavil Premier
(2010)

Estella Heights
(2015)

Him Lam Phu An

(2016)

(2017)

Centum Wealth
(2018)
Saigon Gateway

Same side with metroline station On the other side with metroline station

Launching price Current price* Price growth rate

*Secondary asking price, Q2 2020. Years indicate time of launching Source: CBRE Research, Q2 2020.

F
rom 2020-2025, new supply in The Eastern Figure 3.4: HCMC Condominium, Future supply
City is considerable, with new residential by location
stock in the area expected to expand at an
250,000
Accumulated Launch Supply (units)

annual rate an annual rate of 11.5%, equivalent

to 15,000-16,000 new units per year, eclipsing 200,000
new supply growth in the South (4.6%) and West
150,000
(5.3%) of HCMC. CBRE expects primary prices
for new residential projects in the east to increase 100,000
by around 20% in the coming years, while prices DIST.
for those new projects along the metro line will 50,000

increase by 40%. While proximity to the metro

0
line will be a key factor in driving price growth, 2020 2021 2022 2023 2024 2025
other aspects such as housing tenure and type, Central East West North South
construction quality, amenities and security, will
also be important. Source: CBRE Research, Q2 2020.

14 | CBRE Re se a rc h | Vie t n am Sp e c ial Re p o r t

 I M PA C T O N T H E R E S I D E NT I AL MA RKET

NOTABLE
CONDOMINIUM
PROJECTS INALONG
THU THIEM AND
METRO LINE NO. 1

1
KEYS Luxury High-end Mid-end Future supply

THU DUC Saigon

Gateway
Richland Hill

Centum Wealth

Lavita Charm 1
Lavita Garden
Metro Star

1
DIST. 9
River City
30 KM TO
Him Lam Phu An LONG THANH
INTERNATIONAL AIRPORT
Masteri Parkland
Gateway Thao Dien
Q2 Thao Dien
Masteri An Phu

BINH THANH
Masteri Thao Dien

The Nassim

1
Mozac Thao Dien The Vista An Phu
Wilton Tower Apartment
Thao Dien Pearl
Pearl Plaza Apartment 1 Imperia An Phu
1 Lexington Residence
1
City
1 The Manor
Garden Vinhomes Central Park
D'Lusso
Saigon Pearl Laimian City

Vinhomes
Sunwah
Pearl
Sunshine Venicia
DIST. 2
Golden River Saigon Broadway ROME by
2 Diamond Lotus
Paris Hoang Kim New City
1 The Sun Avenue
The River Thu Thiem
1 1
Thu Thiem Lakeview
Sadora
Water Bay
The Metropole
Thu Thiem
Sarina
Sala Thu Thiem
1
Sarimi
Empire City Sarica

©CBRE RESEARCH 2020 | 15

TH
U
TH
IEM
BR
ID
GE
4
PART 1: THE RESIDENTIAL MARKET

4.
Future
Developments in
The Eastern City
W
hile Vietnam has managed to contain
COVID-19 extremely well by global
standards, the impact of the pandemic
has inevitably filtered through to the real estate sector.
Due to licensing issues since 2018 and restriction of
public events due to COVID-19, new project launches
fell substantially in Q1 2020. However, new openings
picked up after social distancing measures were eased
in Q2 2020, with several new projects coming online in
Thu Thiem and elsewhere. The pipeline of new supply
remains substantial, with several new projects to be
launched in H2 2020 including The River Thu Thiem and
The Opera Residence in The Metropole Thu Thiem
project.

Where land supply allows, large new mixed-use

developments will be developed in the suburban areas
of the Eastern City. These projects will consist of
condominium, office, hotel, retail and education
components along with supporting amenities and
cultural attractions.

16 | CBRE R e se arc h | Vie t n a m Spe c ia l Re p o r t

 F UT UR E D E VE L O P M E NT S I N T H E E A S TERN CITY

PRODUCTS WITH BETTER OFFERINGS: Projects
in Thu Thiem and along Metro Line No.1 typically
offer better design and facilities and offer a more
unique and liveable environment for end-users.
o Within Thu Thiem – a major urban redevel-
opment area in District 2 - new projects predom-
inantly target the luxury segment and typically
feature larger unit sizes, wider corridors, more
space allocated to green areas and iconic design.
In line with the Eastern City’s vision of becoming
an innovation hub, future luxury projects in this
area are expected to be pioneers in smart fea-
tures linking and optimising security, utilities,
entertainment and building management – a trend
that will accelerate in the coming years.
modern facilities and enjoying active lifestyles,
CBRE expects to see strong demand and premium
prices for modern homes. However, high-end prod-
ucts may be beyond their budget, with high-priced
larger units unlikely to hold much appeal.
ACTIVE RENTAL MARKET ALONG THE METRO
LINES: CBRE expects to see an active rental market
for residential properties along Metro Line No. 1,
which will be keenly sought after for their
convenience. Accommodation platforms such
as Airbnb have already recorded rapid growth
through offering rentals in existing condominium
projects around stations along Metro Line No. 1
in Binh Thanh, Thu Duc and Saigon Hi-Tech Park
(SHTP).

o Outside of Thu Thiem, projects within walking Prime areas close to metro stations in the Eastern
distance to Metro Line No. 1 will attract strong City will also attract upcoming branded residences,
demand from young professionals and families. which to date have been confined to District 1 only.
With this demographic seeking convenience,

Figure 4.1: Bangkok Case Studies, Branded Residences and Distance to The Nearest Station
400 2,400

Distance to nearest station (m)

Branded residence (supply)

300 1,800

200 1,200

100 600

0 0
The Residences The Sukhothai The Ritz - The Residence at Four Seasons Banyan Tree The Residences at
at The St Regis Residences Carlton Mandarin Oriental Private Residence Residences Sindhorn
Bangkok Residences Bangkok Bangkok Riverside Bangkok Kempinski Hotel
Bangkok
2011 2011 2017 2019 2019 2019 2020
Supply Distance (m)

Source: CBRE Research, June 2020.

NEW F E AT U RE S O F C ONDOMINIUM PR OJE CT S

Low number Glass lifts Wide corridors Concierge Smart Sky villa units with
of units per enabling and iconic service features large garden in
floor passengers to design (future) (future) each unit
enjoy outside
views

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 17
PART 1: THE RESIDENTIAL MARKET

18 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t

 F UT UR E D E VE L O P M E NT S I N T H E E A S TERN CITY

D E V E L O PME NT
C H A L L E NGE S
Like any major city, HCMC suffers from a range of urban challenges such as
excessive noise, traffic congestion and safety. To mitigate the impact of these
issues, CBRE advises developers to place a stronger emphasis on building
design, such as by providing noise reduction features and designing entry
and exit points for convenience and easy access.

Other major development challenges include land disputes, which typically

involve the illegal confiscation of land from residents. The most prominent
dispute occurred in 2018 and subsequently led to an investigation by the
Government Inspectorate.

Although the completion of Metro Line No. 1 will

provide a welcome boost for the real estate market in
The Eastern City, public transportation in HCMC has
yet to fully develop into an organised, connected and
holistic system capable of catalysing significant real
estate price, demand and development growth. CBRE
also expects it to take some time for the metro system
to fully mature and for local people to become
accustomed to using it.

In addition, while infrastructure and connectivity are undoubtedly

indispensable to supporting property market growth, the systematic
development of residential and commercial real estate alongside supporting
facilities and amenities will be essential to bringing The Eastern City to life.

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 19
PART 1: THE RESIDENTIAL MARKET

5.
Case
Studies

5.1
M E T RO LI NE

R
esidential properties located near
public mass transit systems typically
command higher rents and sales
prices than those that are further away
due to the added convenience they offer.
In other markets across Asia, the price
premium for homes in locations close to
public transport ranges from 6% to 25%.

20 | CBRE Re se a rc h | Vie t n am Sp e c ial Re p o r t

 C A S E S TUD IES

Metro systems have long been a key driver of urban
development. While the first urban rail transit
systems – such as the London Underground (1863)
and New York City Subway (1904) – were completed
in the West more than one hundred years ago, many
developing countries have only recently built their
own. Aside from Japan, where the Tokyo subway
commenced operations in 1927, most countries in
Asia did not see the construction of underground
metro systems until the 1970s. Major milestones
included Hong Kong’s MTR (1979), Singapore’s Mass
Rapid Transit (1987) and Bangkok’s Skytrain (1999).
The construction of new infrastructure such as new
transport corridors and metro systems in densely
populated Asian metropolises including Bangkok,
Manila and Jakarta have opened new areas of those
cities, attracted investment and stimulated new
demand for housing and other types of real estate.
Given that the number of residential property owners
or renters is far greater than the number of consumers
of other types of real estate, the impact of new metro
lines on the property market is typically most notice-
able in the residential sector.

Tyne & Wear Metro,

Newcastle, U.K.
(Opened: 1980, 74.5 km)
Prices of houses within 200
m of metro stations
increased by 2%.
New retail openings and
office developments in
proximity to stations do not
appear to be directly linked
with the development of
metro lines.
Vienna S-Bahn, Austria
(Opened: 1962, 14 km)
Dallas Area Rapid Transit
Districts located along the (DART)
S-Bahn corridor have (Opened: 2002, 144.8 km)
witnessed an 18.7%
increase in the number of
The value of property near the
new housing units over a
DART lines is 25% higher than
ten-year period compared
similar real estate in other
to 4% and 10% in more
areas.
remote locations.

Price of property located Between 1985 and The average price of apartments
within walking distance of 1995, 25% of new rose between 4.1% and 7.9%
the nearest railway or offices, 13% of new after construction was
metro station increased by commercial announced and between 3.9%
7.5% over other locations. premises and 25% and 5.4% after the locations of
of new residential the stations were unveiled.
The impact was most
dwellings in the city
significant at a distance of For an apartment located within
were built adjacent
500-750 m, as opposed 200 m of a station, the average
to the metro system.
to adjacent locations, price increase was 7.4% after
where values dropped. the announcement of construction
and 5.3% after the locations of
In the best locations, Nantes Tramway, France
the stations were unveiled.
residential prices (Opened: 1985, 43 km)
increased by 11%. For an apartment located
between 600 and 800 m away,
the average price rise was 5%
Helsinki Metro, Finland and 3.8%, respectively.
(Opened: 1982, 21.1 km)

Santiago, Chile, Line 4

(Opened: 2005, 23.9 km)
Source: Claudio A. & Gastón P. 2008
Hack J. 2002.

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 21
 PART 1: THE RESIDENTIAL MARKET

CASE STUDY

MANILA,
PHILIPPINES

T
he Manila Light Rail Transit System Line 1 Figure 5.1: Distances to LRT1 and residential
(LRT1) was completed in 1984 and was the land values and correspondence with other
first metro line of the Manila Light Rail Transit observed effects.
System. As of 2020, LRT1 contains twenty stations
Positive values
along an elevated route of 19.65 km.
IMPROVEMENTS
Studies have indicated that the completion of LTR1
LRT Station
has had both positive and negative impacts on LRT Line
residential land values1 . Firstly, evidence suggests NUISANCE Distance

that residential land in closer proximity to the line Negative values INDIVIDUAL EFFECT
have higher values, while plots located further
away from stations are incrementally lower in Positive values

value. IMPROVEMENTS
NUISANCE

At the same time, however, factors such as LRT Station

LRT Line
increased noise, congestion and pollution resulting Distance
from the metro line must also be considered – as
Negative values COMBINE EFFECT
shown by an analysis of distance to the LRT1 line
and residential land values. Properties immediately
457
adjacent to the line have seen land values decline,
414
but this negative impact begins to fade further
371
land-value 1993 - 96 (US$/m2)

away from the line, before finally disappearing at

328
around 900 m.
Changes in residential

285
242
198
155
112
69
26
-17

- 60
300
600
900
1200
1500
1800
2100
2400
2700
3000
3300
3600

Distance to LRT1 (meters to the line)

1
Assessing the impacts of Light Rail Transit on urban land in Source: Assessing the impacts of Light Rail Transit on urban
Manila, Javier F. Pacheco-Raguz, 2010 land in Manila, Javier F. Pacheco-Raguz, 2010

22 | CBRE Re se a rc h | Vie t n am Sp e c ial Re p o r t

 C A S E S TUD IES

CASE STUDY

BANGKOK,
THAILAND

B
angkok’s rapid transit systems currently Figure 5.2: Land value premiums by urban
consist of the BTS Skytrain (Sukhumvit Line rail transit for every km closer to BTS
and Silom Line), the MRT Subway (Blue Line Skytrain/MRT Blue Line station.
and Purple Line) and the Airport Rail Link.
25
%
Bangkok’s BTS Skytrain opened in 1999 along
a route covering the city CBD and inner-city area
20.55%
and now carries just under 700,000 people per
20

day, many of which are residents living along the

%

routes who use the BTS commute to workplaces

and avoid heavy traffic. 16.06%
15
Land value premium

Along with the Metropolitan Rapid Transit (MRT),

studies have shown that the BTS has significantly
lifted the price of real estate located near stations,
especially condominiums2. Consumers are willing 9.47%
10
%

to pay more for properties conveniently located

nearby stations due to the time and money they 6.50%
can save in commuting.
5%

Following the completion of the Sukhumvit line

(Light Green line) from Mo Chit to On Nut,
residential and non-residential land plots were
discounted by between approximately THB 2,100
0%

(US$68) and THB 9,700 baht (US$313) per sq. BTS Skytrain MRT Blue Line
m. for every additional km further from the nearest
BTS station. Non - Residential Residential

Source: The Influence of Rapid Transit Systems on Condominium

After the commencement of operations on the MRT Prices in Bangkok, Chuti Thamrongsrisook, 2011
Blue Line Network, residential and non-residential
land parcels fell by between approximately THB
7,000 (US$226) and THB 16,500 bht (US$532)
per sq. m. for every additional km further away
from the nearest station on the line.
2
The Influence of Rapid Transit Systems on Condominium Prices
in Bangkok, Chuti Thamrongsrisook, 2011

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 23
PART 1: THE RESIDENTIAL MARKET

5.2
P U D O NG
C A S E STUD Y

T
hu Thiem has several similarities with
Shanghai’s Pudong district in terms of
its geographical location, connectivity
and ambitious vision of creating a new
CBD to complement an existing one across
a river.

Figure 5.3: Condominium selling price in most expensive

districts in Shanghai, 2018
25,000
Selling price (US$ psm)

20,000

15,000

10,000

5,000

0
Jing'an Huangpu Changning Hongkou Xuhui District Pudong District
District District District District

Source: CBRE Research, 2018.

24 | CBRE Re se a rc h | Vie t n am Sp e c ial Re p o r t


CASE STUDY
PUDONG
2020
BA C KG R O U N D
T
he rapid redevelopment of Pudong commenced
in 1990, when a policy of “developing and
opening up Pudong” was officially announced.
This was followed by the creation of the Special
Economic Zone in Chuansha, which created the
Pudong New Area, followed by the designation of the
Lujiazui Finance and Trade Zone at the western tip of
the district.
C A S E S TUD IES
More than three decades on, Pudong is now
Shanghai’s main financial district and hosts many of
the world’s largest financial firms as well as the city’s
stock exchange. Major buildings such as Oriental
Pearl Tower, the Jin Mao Tower, Shanghai World
Financial Centre and Shanghai Tower now command
higher rents than properties in Puxi, the historic centre
of Shanghai on the opposite side of the river.
C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 25
PART 1: THE RESIDENTIAL MARKET

PUDONG CASE STUDY

Development
Timeline
Lujiazui Financial District

1999
Jinmao Tower
Height: 420 m

1994
Oriental Pearl Tower
Height: 468 m

COMMENCEMENT SLOWDOWN
1990 - 1997 1997 - 2001
Area established Development stalled due to the
Attracted several financial institutes in China, 1997 Asian Financial Crisis.
including CBC ICBC, Shanghai Stock Developed municipal facilities
Exchange Market
Cooperated with CHIA TAI, Mori Building Co.

600,000 sq. m. 1,750,000 sq. m.

Mainly office Mainly office, exhibition centre
and retail

26 | ©CBRE RE SE ARC H 2 0 2 0

Incentives
Authorities introduced a number of incentives to encourage development in
Pudong. These included:
1990: Tax deductions, exemptions and other
incentives for infrastructure investment.
1992: Pudong permitted to issue stocks and
bonds to attract investment.
2002: Gold and diamond exchanges moved
from downtown Puxi to Pudong.
2005: Foreign banks allowed to do business
in local currency.
Projects in Pudong given status as “National
Priority Projects”.
Allocation of Pudong annual Government
loans of US$90 million.
2002
Bocom Financial Towers
Height: 230 m
2008
Shanghai World
Financial Center
Height:
492 m
ACCELERATION
2001 - 2008
2002, Super Brand Mall opened (a
large-scale shopping centre)
Developed offices, housing and hotel
3,000,000 sq. m.
Continued office construction,
but increased residential and retail development
C A S E S TUD IES
“One-stop” approval procedures introduced
for foreign-invested projects.
Reform of local administration to a simplified
two-level structure. The Government of
Pudong has authority equivalent to that of a
sub-provincial Chinese city, half a level
above the authority given to Shanghai’s
other districts.
Introduction of a Special Economic Zone
strategy. Pudong was granted status as a
Pilot Free Trade Zone allowing a series of
projects which are subject to lower levels of
regulation.
2015
Shanghai Tower
Height: 632 m
MATURITY
2008 - NOW
Core area fully developed,
In 2007 expansion to the east began
Improved supporting services
229 multinational headquarters,
308 companies named in the Fortune Global 500
and 143 headquarters of local companies
3,500,000 sq. m.
Continued office construction,
but increased residential and retail development
©CBRE RESEARCH 2020 | 27
PART 1: A RESIDENTIAL PERSPECTIVE

Pudong:
30-Year Summary Statistics
1990 2014 2019

6 711 1,270
RMB

RMB

RMB
Gross Domestic billion billion billion
Product

1 290 432
RMB

RMB

RMB
Fiscal revenue
billion billion billion

Source: Pudong New Area Government

1,075 332
registered regional headquarters
financial of multinational
institutions corporations

83 240
foreign-funded asset
management foreign-funded research
companies and development centres

2,902 high-tech companies 350 hectares of green

area in 2019

*In the first four months of 2020, eight regional MNC headquarters have been established in Pudong.

28 | ©CBRE RE SE ARC H 2 0 2 0
 C A S E S TUD IES

L E S S O N S L E AR NE D
FR OM P U D ON G

T
he Chinese government promoted Pudong
globally to raise finance for infrastructure
development of this area at a very early
stage. However, HCMC authorities are unlikely
to pursue a similar approach for The Eastern City.
However, as in Pudong, The Eastern City is likely to
see the creation of a special economic area along
with other incentives, establishing Thu Thiem in
District 2 as its financial and business centre.

With Huangpu District and Pudong located on

either side of Shanghai’s Huangpu River, there are
certain similarities with District 1 and Thu Thiem in
HCMC. However, while the average selling price in
Pudong is 30-40% lower than Huangpu District,
CBRE believes that due to its smaller scale and
closer distance to District 1, Thu Thiem’s price
differential with the historic CBD will be lower. In
the longer term, residential properties in Thu Thiem
may even command prices similar to the CBD
thanks to the area’s better planning, newer
infrastructure and enhanced connectivity.
The successful development of
Pudong has a number of key
lessons for city governments
elsewhere, such as HCMC,
who are looking to establish
new financial and commercial
districts adjacent to existing
CBDs.

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PART 1: THE RESIDENTIAL MARKET

6.
Conclusion
B U IL D IN G A D VA N TA G E
IN A RA P ID LY C H A N G ING
B U S IN ES S EN V IRON M EN T

DEVELOPERS/INVESTORS

The rapid appreciation in land prices in The

Eastern City may pose a challenge to new players
or developers lacking financial capacity. The
availability of developable land in Thu Thiem
New Urban Area is particularly tight.

New developments in The Eastern City within

existing and well-planned commercial/residential
hubs will be keenly sought after by buyers and are
expected to command a premium. The most
popular areas will be An Phu, Thu Thiem and the
Saigon Hi-Tech Park (SHTP).

Developers with land banks in The Eastern City

will need to create new and attractive concepts in
their residential developments to attract buyers and
renters who may be spoilt for choice.

HOME BUYERS

End-users and buy-to-let investors are advised to

purchase residential units in developments located
along metro lines within The Eastern City due to the
better connectivity they offer to other areas within
the city and to the HCMC CBD.

Buyers must thoroughly research issues such as

noise and traffic congestion around metro stations
and pay close attention to developers’ reputation, a
project’s legal status and construction progress.

30 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t

 C O N CLUS IO N

Figure 6.1 Average Land Price, Figure 6.2 Average Land Price,
District 2, 2011 – 2020 District 9, 2011 – 2020

4,500 4,500

4,000 4,000

3,500 3,500
Land price (US$ psm land)

Land price (US$ psm land)

3,000 3,000

2,500 2,500

2,000 2,000

1,500 1,500

1,000 1,000

500 500

0 0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

District 2, Thanh My Loi District 2, An Phu District 2, Thao Dien District 9, Lien Phuong District 9, Suoi Tien

Figure 6.3 Average Land Price, Figure 6.4 Land Price, CAGR 2018 - 2020,
Thu Thiem, 2011 – 2020 District 2 & District 9

14,000 60%

12,000 50%
Land price (US$ psm land)

10,000
40%

8,000
30%

6,000

20%
4,000

10%
2,000

0
0%
2013 2014 2015 2016 2017 2018 2019 2020 Thu Thiem Thanh An Phu Thao Dien Lien Phuong Suoi Tien
My Loi
District 2 District 9

Source: CBRE Vietnam, Q2 2020.

Please note the land price ranges included in this page have been included as a broad guide only.  Readers should not make investment decisions
without first doing a detailed study on the subject site and obtaining a formal valuation.  Land prices are subject to various positive and negative
attributes, including but not limited to, proposed/approved plot ratio, permitted uses, land size, location, clear legal status, land tenure and other
restrictions. CBRE Vietnam does not accept any liability under any cause of action including negligence for any loss arising from use of or reliance
upon this information.

C B R E R e s e a r c h | Vi e t n a m S p e c i a l R e p o r t | 31
PART 1: THE RESIDENTIAL MARKET

CO N TACT
DESMOND SIM JONATHAN HILLS DUNG DUONG THANH PHAM
Executive Director, Senior Director, Senior Director, Associate Director
Head of Research, Research Head of Research Head of Research, HCMC
Singapore and South East Asia Asia Pacific Vietnam Vietnam

desmond.sim@cbre.com.sg jonathan.hills@cbre.com.hk dung.duong@cbre.com thanh.pham@cbre.com

JOURNEY TO THE EAST:

THE EXPANSION OF
HO CHI MINH CITY METROPOLIS
PA RT 1 : The Residential Market
CB RE RE SE ARC H | SE P TE MB E R 2020

© 2020 CBRE (Vietnam) Co., Ltd. All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary
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32 | CBRE R e se a rc h | Vie t n am Sp e c ial Re p o r t