Residential Accommodation in Vietnam
In Vietnam there are a variety of residential accommodation types and styles available to suit all budgets and comfort levels, from no-frills apartments to sprawling villas. Residential property in the city can be broadly classified into serviced apartments, and houses – frequently also referred to as villas. Each group can be further sub-divided, broadly along rental lines, with the largest and / or best located, naturally, commanding the highest rental levels. Tho ugh Hanoi is the capital city, HCM City is Viet Nam ‘s economic, cultural, scientific and technological hub.
Ho Chi Minh City
HCMC has a rapidly developing economy, well educated population and modern facilities. Average municipal economic growth is forecast to be 11.5% in 2005, compared to the country’s average over the past 10 years of 7.4%. Residence’ average per capita income was US$1,800 in 2004 (compared to USD$420 nationally), and city authorities estimate that it will reach USD$3,000 by 2010
HCM City covers 2,095 sq.km, divided into 24 districts hosting an official population of more than 6.12 million. The southern business capital is a major transport centre, well connected by road, rail, water and air to the rest of the country, and internationally. The city has a network of rivers and canals spanning 2,900 hectares, which are convenient for both navigation and irrigation. The city’s power, water and telecommunications are reliable. There are 14 industrial parks (IPs) and export processing zones (EPZs) in HCM City : Tan Thuan, Linh Trung 1&2, Tan Tao, Hiep Phuoc, Le Minh Xuan, Tay Bac Cu Chi, Cat Lai, Phong Phu, Binh Chieu, Tan Binh, Vinh Loc and Tan Tho i Hiep.
What most people (and maps) refer to as Ho Chi Minh City , infact only accounts for some 26% of the total area. The remaining 74% is basically split between the south-eastern mangroves & swamps of Nha Be , Binh Chanh & Can Gio Districts; and the northern-western low lands of Cu Chi & Hoc Mon. The city is undergoing ‘urbanisation’ so rapidly, that by 2020 the 17 inner city districts are expected to have a population of 5.8 million to 6.4 million, while the suburban area will have 3 million to 4 million residents.
Between 1999-2004 Ho Chi Minh City’s population experienced an increase of more than 1 million people or an average of 200,000 inhabitants a year, according to Municipal Economic Institure & the city’s Planning and Construction Institue, which also said that migrants account for 30% of the city’s 7 million people.
Serviced Apartments International Standard
Ho Chi Minh City only has a combined stock of serviced apartments of about 2,000 units, an inadequate number relative to the ever increasing demand. Thus rentals have almost doubled in less than 5 years to the current levels. However, local investors have recently seen the investment opportunities available and are thus now rapidly filling the supply gap with a wide variety of new developments, both big and small. By the end of 2006, it is estimated that the number of units available will have doubled to over 4,000 units with several thousand more under construction. Tho ugh many of these are being built for sale on the local market (foreigners are unable to buy or sub-lease), many are being bought to rent to expats, at prices ranging from USD$800 – USD$2,700 per square meter, with a view to obtaining rentals from USD$10 – 30 per square meter per month.
However, given the relatively stable number of expats living in Vietnam, coupled with strict new foreign employment registration stipulations, and the dramatic increase in stock, one can foresee rentals falling to levels more in line with those of ASEAN regional competitor cities over the course of the next few years.
The largest and best located serviced apartment buildings with the widest range of facilities and services were constructed in the mid to late 1990’s by foreign developers with deep pockets – typically USD$20+ million Joint Ventures. Since then, very few foreign investors have ventured into the domestic market. These ‘established’ buildings have all had average occupancies of over 90% since @2002 and so are able to command premium rentals. Some offer short term accommodation (at upto USD$50 / sqm per month) but many have waiting lists and so are only interested in minimum 12 month contracts. The majority of these are in the ‘downtown’ area but some are a 20 minute commute.
The other segment of the existing serviced apartment market is comprised of buildings with less than @50 units that are locally developed. Location and quality varies, as one would expect, but in common with their larger and more prestigious foreign invested counterparts, most have occupancies of over 90% and so are in a powerful position to dictate terms and conditions.
Although the many new domestic developments are being constructed for less than that which the foreign developers paid ten years ago, the standards are comparable, and since they own the ‘freeholds’ they should be able to provide strong rental competition to the established properties – a fact not unnoticed to some, who are now desperately trying to sell long leasehold interests (to foreigners and locals) for the unexpired terms of the Joint Ventures, whilst rentals are at a ‘top’ and before they fall.
Houses / Villas
Location is one of the most important factors when buying or renting a property. Certain districts are preferred by expatriates: the CBD (Central Business District) of Districts 1 & 3 and the greenery and clean air of the An Phu, Thao Dien, Binh An Wards of District 2 (just over the Saigon Bridge @15-20 minute drive). Other increasingly popular areas are in Tan Binh (around the airport @20-30 minute drive); and around the ever developing Saigon South area of District 7 (20-30 minutes drive).
Districts 1 & 3 (around the CBD)
There are 2 types of properties : Villas & Town Houses. Town houses are typically narrow 3 or 4 floors, straight up-and-down with the stairs in the middle with the ground floor used for parking and kitchen and maid accommodation. The size is usually never bigger than 5m x 20m. Villas are usually 2 floors high, wider (though most have by now literally been ‘chopped’ down the middle), and more expensive to reflect their alternative commercial use (there is no restriction on use in Vietnam ). Very few of these still exist (in the private sector) and most have been converted into restaurants or coffee shops. Any front gardens have long since been chopped-off and sold / leased separately for street front retail.
District 2 (around An Phu)
The area on the far side of the Saigon bridge is, by Saigon standards, a ‘green & pleasant’ land. Tho ugh still true, more and more of the ‘green’ land plots (and they have all, frequently, been sold many times over by speculators) are now being developed into houses, with a few of the larger plots turned into apartments or more residential compounds. Several hundred expats (most with families) live in the area and there is the usual assortment of expat spin-off services and facilities: a supermarket, sports, leisure & recreation clubs. Most of the villas are two storey and from 700sqm to 1,500sqm gross, with usable areas range from @250sqm upwards, and many with swimming pools. Inside the various compounds, sizes are smaller but with the benefit of communal facilities and landscaping & security. Consequently, for those expats with ‘above average’ budgets and a longing for some peace and quiet, amid what must be the noisiest city in the world, or with children, An Phu has deveoped a reputation since it still has some large properties with walled gardens or in landscaped compounds, that no longer exist elsewhere in the city.
Tan Binh District (around the Airport)
By Ho Chi Minh City standards, a relatively quite location – except of course for all the builders! Land prices are more expensive around the airport to reflect is proximity to Tan Son Nhat and the fact that the local infrastructure is set to improve this year with the USD$620-USD$930 million development of a metro line and the up-grade of the ‘airport road’. The houses tend to be larger and with far too many rooms for most people. A tiny percentage even have small gardens. Especially popular with the Korean community and the usual international diaspora of expats working in the freight forwarding & logistics type industries.
District 7 (around Saigon South)
The formation of the Saigon South urban area on 2,600 hectares is meant to create conditions for urban and rural districts in the surrounding areas of District 7, District 8, Nha Be and Binh Chanh to develop. With the (at long last), construction of a couple bridges, Saigon South is no longer only accessible via the inadequate Kinh Te bridge by the Saigon Port. It is now possible to travel from the Phu My Hung (PMH) New Residential Area (often referred to as Saigon South) to the CBD in 15 minutes. After years of relative inactivity, the 600 hectare @USD$250m PMH Joint Venture have started construction of the first of many planned apartment buildings and houses. Several international schools; the Franco Vietnam hospital; RMIT (Royal Melbourne Institute of Technology) University; and other such ancillary service suppliers & facilities have also committed to a future amongst the landscaped greenery. The government have now also approved the construction of the 1,950m long USD$114m Phu My bridge, that ill connect the city ring road (that runs through PMH) with the CBD via the 770 hectare USD$632m Thu Thiem New Urban Area of District 2. Apartments are being sold from @USD700/sqm and appearing on the secondary market to rent from USD$500/month upwards. Villas cost upto USD$500,000 and rentals start from USD$1,500/month