Thu Duc City: HCMC’s new investment hotspot

Ho Chi Minh City (HCMC) has just approved to establish Thu Duc City. What are its current and future residential dynamics that have investment potential?

January 08, 2021
Thu Duc City – Future Investment Hotspot in HCMC

The recent government announcement of establishing Thu Duc City, covering Eastern Districts (2, 9 and Thu Duc) of Ho Chi Minh City (HCMC), has received huge interest locally. The news is being even more widely discussed from a residential market perspective.

Thu Duc City is the strategic gateway that connects HCMC with Dong Nai and Binh Duong - two vital economies in the South of Vietnam. The area has seen a series of large-scale infrastructure projects, taking up to 70% of the total capital for infrastructure in HCMC during the 2010-20 period. Moreover, it is home to the Thu Thiem New Urban Area (NUA), the expected second CBD of HCMC in the coming years. That is why Thu Duc City has long been a favourite destination for residential developments. The city accounts for 30% of HCMC’s total residential units launched, whereas it comprises only 10% of the city’s total area and 12% of the total population. While Luxury and Premium projects tended to be located in those wards in District 2 that are near to District 1 (the current CBD), lower segment and landed projects (RBL) were located further to District 9 where large land bank remains available.

Figure 1: Map of cumulative launches in HCMC at end-3Q20

Source: JLL Research, 3Q20

Strong demand

Just like HCMC’s overall residential market, all projects in Thu Duc City have been well-received. The demand is supported by the growing economy of Vietnam, and by buyers who either have cash-on-hand or the ability to leverage. As of 3Q20, more than 90% of the total supply was taken up by buyers. Also, in terms of price growth, the area has outperformed overall HCMC, in both apartment and landed properties over the years.

Figure 2: Primary price in Thu Duc City versus HCMC’s overall in apartment and landed properties

Source: JLL Research, 3Q20

Looking forward to the plan, Thu Duc City will turn into a new smart and innovative urban area, which will contribute greatly to the economic development of HCMC and Vietnam’s Southern areas. Some of its key developments include: 1) Thu Thiem NUA - the financial technology centre, 2) High-tech park - the automated production centre, 3) National Universities area - the information technology education centre, 4) Rach Chiec National Sports Complex and 5) Tam Da-Long Phuoc ecological and technology centre.

Along with massive urban planning, new residential developments have started to gather pace in the area. In the next 3-4 years, 54% of HCMC new supply will be in Thu Duc City, bringing the city’s share of cumulative launches up, from 30% to 38% at end-2023. In particular, the share of Thu Duc City will rise in all segments and more noticeably in luxury and premium apartment.

Figure 3: Cumulative launches in HCMC residential market at end-3Q20 and end-2023

Source: JLL Research, 3Q20

As Thu Duc City is taking shape, it will be exciting to see how the real estate market, especially the residential sector, will evolve in the city. With developers and buyers starting to take advantage of this new opportunity, we strongly believe that Thu Duc City will be one of the main investment hotspots in HCMC in the coming years.