Last week, Mr Nguyen Thien Nha, Secretary of the Ho Chi Minh City People’s Party Committee, proposed the government to give in advance a sum of VND2.15 trillion ($93.5 million) from central or local authorities to pay the debt for contractors constructing Ben Thanh – Suoi Tien metro line.
Mr Nhan requested that local authorities do careful research to explore the land along each side, with hopes that a land fund could become a remarkable financial source to turn back into investment for the metro system. He also requested that the plan to use land areas along the system must be submitted to the committee by April.
The HCMC Department for Planning and Architecture noted that it started initial research to develop high-rise buildings, trading centres, and other service constructions along the city’s first metro line. All of the current projects, however, are under construction by the private sector.
CBRE Vietnam has forecast that land prices within a 10-minute walking distance of metro stations would be from 10 to 20 per cent higher than those in other areas.
Stephen Wyatt, Director of JLL Vietnam, told Vietnam Investment Review that traffic congestion has become a way of life for many of Southeast Asia’s cities, causing major issues. It is not only adding significant time to the daily commute but it is also having a negative impact on public health and the environment.
Wyatt said: “As Ho Chi Minh City’s official population is set to increase to more than 10 million by 2025, we can already see the city’s infrastructure buckling under the pressure, and we expect the current situation to get worse.” He added the development of the metro system has had a strong impact on real estate market.
Property development in HCMC has been booming along the Metro Line No. 1 since construction began, which in turn gave a boost to land price growth in the area. Generally, completion of the route should have some positive effects on the real estate market, Wyatt analysed.
As almost all projects alongside the metro line have been launched with very good sale rates thus far, completion of the line on secondary markets will be more evident with an expected increase in both number of transactions and price.
Secondly, completion will also help extend the urban area further east of the city. As there is still a large available land bank in District 9, the real estate market in this location will likely become one of the most sought-after investment locations.
“The earlier-than-expected completion of the line also implies the government’s effort in enhancing the urban transportation system, and this will creates a spillover effect on other areas and districts with future metro routes,” Wyatt added.
In many countries, a metro system has significant effects on real estate development, resulting in land prices rising and property projects booming. Retail and office premises especially are often located further away from the city centre.
For example, there have been marked changes in real estate purchasing behaviour and the travel habits of residents in the Thai capital of Bangkok since metro lines came into service. Thais have become increasingly dependent on cars instead of motorcycles and travel frequently to suburban areas. Notably, the number of property products along metro routes has increased by an average of 10 per cent compared to other areas.
Multiple housing projects have been developed along the metro line since 2012.
More than 132,000 units offered for sale, around 43 percent of total launches, come from projects located along Metro Line No.1 in the last seven years.
