Thu Thiem auction lures international developers

Thu Thiem auction lures international developers

The auction of 55 land plots in Thu Thiem New Urban Area in District 2, Ho Chi Minh City is expected to ­encourage foreign developers through the wide land area offered, the transparent conditions and low risks.
07:00, 01/10/2019
Huge pieces of land are up for grabs in Ho Chi Minh City’s District 2, offering potential for initiatives across a wide range of sectors.

According to a report from the Investment and Construction Authority for Thu Thiem New Urban Area sent to Ho Chi Minh City People’s Committee, under the appraisal plan from 2016, these land plots covering nearly eight hectares will bring an estimated VND22 trillion ($948 million).

The land plots are mostly cleared and divided into three categories based on the progress of land-use rights auctions and investor selection through bidding. The first category, which includes 16 plots with a combined area of some 158,000 square metres, will be taken into auction at the end of the year. Some have been zoned for schools, trading and service centres, and apartments, and are expected to bring in over VND4.7 trillion ($200 million). Site clearance has already been completed, and technical infrastructure facilities are being developed.

The second category covers a total area of 269,000sq.m with estimated value of more than VND8.1 trillion ($350 million). These land plots will be home to outstanding constructions of a financial centre, a performing arts centre, and hotels. All of the plots will be subject to land-use rights sales and investor selection when the development of the technical infrastructure is completed.

The last category includes 23 plots spanning more than 365,000sq.m with estimated proceeds of over VND9 trillion ($390 million) will be taken into auction after the auction of the first and the second category is completed. Site clearance has not yet been finished for this category.

This is not the first time that Ho Chi Minh City People’s Committee has made decisions for land auctions in Thu Thiem. Before that, the city had decided to take four land plots into auction with strict conditions.

The conditions included that investors who wanted to participate in the auction must make an investment not less than 20 per cent of the total investment capital for projects which are less than 20 hectares, and not lower than 15 per cent for more projects than 20ha in size. Investors also are not permitted to transfer to other investors after they win an auction.

It’s neccessary to have such strict conditions for an auction for 55 land plots to limit the slow pace and delays of development in Thu Thiem in the future.

Apart from the land plots, there will also be 3,800 resettlement apartments in Thu Thiem New Urban Area that will be put up for sale for more than VND9.9 trillion ($425 million).

Covering a total area of 657ha along the Saigon River in the eastern part of Ho Chi Minh City, the Thu Thiem peninsula was originally expected to transform into a new commercial, financial, cultural, and tourism hub, serving as an extension of the city’s overcrowded central business district. The planned area will be consisting of residences and public facilities such as a central square, a riverside park, a financial centre, as well as an international exhibition and convention centre.

The city government has so far paid nearly VND17.5 trillion ($755 million) in ­compensation to all but four of the 14,357 households ­affected by the project and has recalled 716ha of land. ­Financial support for these residents is higher than that ­offered by other similar projects.

Thu Thiem allocation

  • Plots 1 and 2 face the existing District 1 of Ho Chi Minh City and have therefore been identified as the core of the new urban area. These two plots will be developed as the financial and commercial heart of Thu Thiem and will comprise high-density office towers, commercial developments, and public spaces. The main focal point of this area will be the tallest building in Ho Chi Minh City, which will serve as an iconic feature of the city’s skyline. There will also be a large square in the centre of this core area containing indoor and outdoor arenas and recreation spaces.
  • Plot 2b: In 2015, a consortium of local companies, Tien Phuoc Real Estate JSC and Tran Thai Real Estate Co., Ltd., and Denver Power Co., Ltd., a member of UK-based Gaw Capital Partners received an investment certificate to develop Plot 2b worth $1.2 billion. The 15-ha area, known as the Empire City Complex, will consist of an 86-storey building, a five-star hotel, a shopping mall, and an office building.
  • Plot 2a: In 2014, South Korean conglomerate Lotte and its Japanese partners Mitsubishi and Toshiba received in-principal approval to develop Plot 2a worth $2 billion. The Eco Smart City development is expected to feature luxury trade centres, hotels, office buildings, and apartments across an area of 10ha.
  • The East/West Boulevard consisting of plots 5 and 6 will be reserved for various types of residential development as well as supporting facilities such as schools, medical centres, and parks. Under an agreement with Thu Thiem Authority, the whole land area was given to Dai Quang Minh Real Estate Investment JSC, a local company, in exchange for its investments in infrastructure systems in Thu Thiem including building four major roads, the Thu Thiem 2 Bridge, and a pedestrian bridge. The company has developed an 80-ha residential area near the southern section of Mai Chi Tho road, and a 20-ha area with 11 plots of land near the northern section of the road.

Source: Thu Thiem – The Pudong of Saigon - CBRE 2015

Peter Ryder - Founder and CEO Indochina Capital

Thu Thiem is known as the upcoming extended central business district of Ho Chi Minh City, which provides huge potential for real estate development. Foreign investors are keen on acquiring land there. However, they have recently become quite sceptical with site sourcing, considering land-related disputes in the area.

The city’s auction plan will create a more reliable channel for foreign investors to access land directly from the authorities, then roll out construction and develop Thu Thiem more rapidly. In addition, the plots under auction cover a wide range of land uses including residential, commercial, services, public works, which will attract a diversified group of interested investors.

We are very interested to participate in the auction since we share the city’s vision for Thu Thiem and see that doing projects there will potentially generate attractive returns. The auction aims to offer clean sites with completed infrastructure conditions and specific planning parameters for each plot. These criteria lower development risks to foreign investors.

I hope that the auction will be carried out in a well-organised and transparent manner and successfully assign land plots to capable investors, as well as generate good proceeds for the city’s budget.

Alain Cany - Country chairman Jardine Matheson

It is good news to hear about this plan. The slow pace of development in Thu Thiem for the last year or so, and the delays, were a concern among the business community. Nonetheless, the Thu Thiem area is becoming more attractive in terms of location with recent infrastructure works being completed.

Several projects have been completed and it looks less dense and greener than the rest of Ho Chi Minh City. In addition, many of the land plots in Thu Thiem area have been cleared and are ready for development.

As a foreign investor in Vietnam, we definitely will be interested to consider some of those land plots for residential development, especially since we already have a presence in the area.

With a well thought out Thu Thiem master plan and infrastructure planning, we are confident that this area could potentially become the new central business district of Ho Chi Minh City if the developments are properly executed.

Our participation in the auction will hinge on eventual financial feasibility studies of the land plots and terms and conditions of the auction and to the development.

Foreign investors will be expecting transparency in order to attract their participation. Therefore, the process should be clear and conducted in a transparent manner.

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