loader image

HCM CITY’S METRO LINES AND ITS IMPACT ON REAL ESTATE

Expect to see a surge in real estate activities in HCMC within the next 5 years when the 2 Metro Lines are completed and supplemented by its first Bus Rapid Transit Route.

Back in 1986, the Doi Moi Economic Reforms liberalised the stagnant post-war economy of Vietnam and transformed it into a market-driven capitalist system. Vietnam never looked back since, growing rapidly yet sustainably on the economic front. Experts have rated Vietnam’s economic growth second only to China in the world.

apr4th60With sustainable economic growth (increasing year-on-year GDP), Vietnam experienced a high urbanisation rate of about 34% in 2015 (year-to-date). This placed a huge strain on the existing traffic infrastructure in urban areas; narrow roads and lack of efficient public transportation have led to constant traffic congestions. Experts have established that for Vietnam to really achieve its potential as an economic powerhouse in the ASEAN region, it has to improve its infrastructure.

Since 2012, several initiatives were taken by the Government aiming to ramp up its infrastructure improvements; there was the Metro Line 1 breaking ground in 2012; Metro Line 2 construction starting in 2015 and Bus Rapid Transit route planned for 2017 ground-breaking. These improvements are expected to affect the real estate market in Ho Chi Minh City positively, giving rise to new opportunities.

Metro Line 1 ready by 2020?

Costing USD1.1 billion with a network length of 19.7km, the Metro Line 1 starts from near Ben Thanh Market (District 1), extending to Saigon Bridge (Binh Thanh District) before ending at Suoi Tien Park (District 9). Line 1 will be serviced by 14 stations, with 3 stations in the city centre (2.6km) being underground and the other stations to the east of the Saigon River on an elevated platform. The expected operationally ready date of the project is scheduled for 2020.

[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1,2,3,4,5″ ihc_mb_template=”1″ ]

Once completed, the Metro Line 1 will serve 160,000 commuters daily with the figures expected to increase exponentially in the years to come as areas along the Line are presumed to be developed hence attracting people to migrate here. Line 1 will be the main driving force in the projected development of the land in the far reaches of District 2, Thu Duc District and District 9.

This is in line with the Government’s plan to urbanise District 2 and District 9, and to create a new population centre to the east of the city. Currently, the landscape of these areas is marked with undeveloped land with pockets of low-rise structures serving as factories, squatter settlements and low-cost housing at intervals. With the completion of the Metro Line 1, expect the landscape in the east of HCMC to undergo a major makeover.

As it stands, a lot of developers are rushing to acquire land in close proximity to the Line and a number of deep-pocketed developers have already launched large scale residential projects such as Masteri Thao Dien and Gateway Thao Dien along the lines near to train stations in District 2. Commercial and retail developments are also following suit gravitating towards Metro Line 1 such as the construction of Vincom Thao Dien, the largest shopping mall in the east of the city.

Metro Line 2 – ready 2020?

As progress is moving steadily with the Metro Line 1, HCMC’s Metro Line 2 started construction in January 2015, is expected to cost USD1.2 billion and is also slated to be operationally ready in 2020. Line 2 will stretch from An Suong (District 12) to Ben Thanh before continuing east through to Thu Thiem (District 2), bringing the total network length to approximately 19km.

The Metro Line 2 will connect the densely populated northern districts of HCMC to the city centre and Ben Thanh, while extending all the way to District 2 in the east. This is seen as a commitment by the Government to push through with their plans to develop Thu Thiem into the New Financial Centre of Ho Chi Minh City. By improving the infrastructure and transport connectivity to Thu Thiem, the large piece of undeveloped land close to the city centre will be made highly accessible and would encourage further developer confidence in engaging in large scale real estate developments here.

Bus Rapid Transit Route

Expected to start in 2017 and costing USD137.45 million, HCMC plans to build its first Bus Rapid Transit Route (BRT). At the west end of the route from An Lac crossroads (Binh Tan District) to the east end at Rach Chiec (District 9), the route will run along Vo Van Kiet Street (formerly known as the east-west highway), pass Thu Thiem Tunnel under the Saigon river and through to Mai Chi Tho Street (District 2). A total of 28 stations is planned for this route while the first phase of the project will see the use of 28 80-seater buses ferrying 28,300 passengers a day.

The BRT will cut down travelling time from the west to the east of the city, encouraging settlement of population in the newly accessible lands to the east of the city. Once again, this is in line with HCMC’s masterplan by the Vietnamese government. Similar to the effects the Metro Lines are bringing to real estate development, expect redevelopment of buildings along this route to capitalise on the more efficient BRT. There’s a possibility of development of commercial hubs around bus terminals and stations all throughout the route.

Summary

When Metro Lines 1, 2 and the Bus Rapid Transit Route are put into operation, it will be a momentous event for HCMC and Vietnam in general. More significantly, the completed infrastructure works will provide more opportunities in the city’s real estate market. Real estate owners with property in close proximity to these infrastructure networks will experience a rapid appreciation in their property values. Sale and lease prices of property will increase driven on by the infrastructure improvements and the corresponding increase in demand. Retail businesses will boom.

Developers will find new opportunities developing mix-used commercial-residential real estate in close proximity to the infrastructure networks. Such commercial centres will attract the settlement of population all around them as sources of employment, entertainment and residential facilities become increasingly available. Finally, Vietnam’s government can realise their urban masterplan to encourage population settlement and migration to the underdeveloped east of the city

[/ihc-hide-content]
aidamAidan Wee is the General Director of Somot-VN Co Ltd, a boutique real estate brokerage for foreigners in Vietnam as well as a Licensed Property Salesperson (accredited by the Council of Estate Agencies in Singapore). He can be reached at (+65) 9345 8633 or aidan.property@outlook.com

0
    0
    Your Cart
    Your cart is emptyReturn to Shop