Post on 12-Feb-2021
JLL Research Report
The largest mixed-use inner city development in Southeast Asia
Vietnam | November 2017
Time for Thu Thiem
Time for Thu Thiem 3
PuxiShanghai Philippines Vietnam
Pudong Makati Bonifacio District 1 Thu Thiem
30,000
25,000
20,000
15,000
10,000
5,000
0
US$/sqm
43%
0% -34%
2 | JLL
1. Time to buy residential units Residential prices in Thu Thiem are currently trading at 30-35 percent discount below District 1 levels. In Shanghai, apartment prices in Pudong are 43 percent above Puxi, the old CBD and Bonifacio prices are the same as Makati. Over time, we expect Thu Thiem to follow a similar trend.
2. “Tipping point” for office development With lack of supply and increasing rents in the existing CBD, and the completion of a major infrastructure within Thu Thiem, we anticipate large head office requirements will start to consider Thu Thiem as a viable alternative to the existing CBD.
3. Lack of government funding and incentives Unlike other new urban development area in other countries, the lack of preferential policies/incentives are the biggest impediments to the development of Thu Thiem. Developers/investors will need strong support from the government on legal and tax-related matters. Creating a more favourable and more transparent business environment will act as a catalyst, speeding up Thu Thiem’s development progress.
4. Difficulty in acquiring land While the majority of land has been allocated, many sites have not been developed. In our opinion, there are three potential ways to acquire land in Thu Thiem.
Key takeaways from this reportA. Acquire land from an existing owner that has been allocated land.
B. Form a joint venture (JV) with a local partner who has been allocated land.
C. Enter bidding process for the land that has yet to be allocated.
5. Phasing It is important to note that Thu Thiem is 657 hectares, with 20,426 residential units and 3.4 million square metres of commercial space. It is critically important that developers pay careful attention to market conditions and supply and demand dynamics to limit the risk of oversupply in the future.
6. Long term construction site It is inevitable on a large mixed-use development site that the area will be a construction site for a number of years. Developers and purchasers of residential property will need to be mindful of this fact when investing in Thu Thiem.
7. Time for school operators to enter the market According to the master plan, 10 land parcels are set aside for school developments to serve the educational needs of Thu Thiem residents and surrounding areas. Due to lack of infrastructure and residential community this sector has attracted less attention thus far. However, there are a number of opportunities for school operators wanting to expand their footprint in this attractive market.
Figure 1: Old CBD v.s. new CBD prime apartment selling price
Source: JLL Research
Ha N
oi Highw
ay
N
guyen
Van L
inh
East-W
est
Bouleva
rd
Go Vap
Tan Binh
THU THIEM
BinhThanh
CBD
District12
Thu Duc
District9
District2
District7District
4
District5
District10
District3
Tan SonNhat Airport
District11
District6
District8
Nguyen
Duy Trin
h
Nguyen H
uu Tho
1A
1A
1A
1A
657 ha9,784,129 sqm
362,563 people
Land area
Total estimated population**
Total GFA*
Time for Thu Thiem 5 4 | JLL
Thu Thiem, Ho Chi Minh’s proposed financial district and mixed-use urban area, is set to become the largest inner city development in Southeast Asia in the coming years. Once complete, Ho Chi Minh City will transform into a modern megacity, following a similar path to Shanghai, Manila, Bangkok and Jakarta.
Over the past 30 years, Ho Chi Minh City has witnessed a meteoric rise. However, rapid growth comes with growing pains. Infrastructure within the existing CBD is starting to buckle under the pressure of rapid expansion, vacant land is difficult to find, land values have reached levels that make office development unviable, and office rents have reached levels not seen since 2008. Traffic congestion has increased over the past five years, with the number of cars increasing 35 percent per annum from 2012-2016,
according to Vietnam Automobile Manufacturers’ Association (VAMA) figures.
The master plan for Thu Thiem will alleviate the pressures faced in the existing CBD, with the possibility of saving some of the historic urban centre of the “Pearl of Asia” from demolition and redevelopment.
The 657-hectare site is located on the Saigon River’s opposite side, facing the existing CBD. Comprising 176 land parcels with approximately 3.2 million square metres (GFA) residential space and 3.4 million square metres (GFA) of commercial space, the total site will eventually accommodate a residential population of 145,000 and employee population of 217,000. The new financial district will be home to a number of major head offices and
will become a vibrant destination combining residences, offices, shopping centres, hotels and serviced apartments.
It is fair to say Thu Thiem has suffered a chequered history, with many false starts because of complicated land compensation issues, turbulent economic conditions and lack of favourable government policies. However, with pressure mounting on the existing CBD and renewed impetus on the completion of major infrastructure, we believe that now more than any other time since its inception 12 years ago, Thu Thiem has reached a “tipping point”. It’s time for investors to set their sights on Thu Thiem for the investment opportunities it offers.
Time to invest in Thu Thiem
*Including basement area**As per master plan, total population included 145,393 residents and 217,170 employees
Hiep Binh Phuoc M3
M2
M1District 12
Go Vap
Tan Phu
District 9
BinhThanh
District 11
District 8
Ten Lua
District 4
District 5
District 7
Vuon Lai
Tan Son NhatInternationalAirport
ProposedLong Thanh
International Airport
ProposedThu Thiemtrain station
ThuThiem
Cat Lai Port
Suoi Tien
Time for Thu Thiem 7 6 | JLL
Thu Thiem is designated as Ho Chi Minh City’s new central business district.
After the completion and operation of the infrastructure - including Metro Line No. 2 and Bridge No. 2,3,4 connecting to the District 1 and 7 – Thu Thiem will be
operated properly as planned.
Mr. Yong-Beom(Kevin) Kim Functional Manager, Vietnam business team,
GS Engineering & Construction Corp
“
”
Sitting at the heart of Ho Chi Minh City, the Thu Thiem peninsula is the most significant development area in the city. Thu Thiem is bordered by the Saigon River and is only five-minute drive away from the central business district via the Thu Thiem Tunnel. Alternatively, one can easily reach the CBD and other parts of Ho Chi Minh City via the Thu Thiem Bridge 1, which links the peninsula to Binh Thanh District. Located only 10 kilometers away from the Tan Son Nhat International Airport, Thu Thiem is within convenient reach.
Thu Thiem is a strategic gateway from Ho Chi Minh City to future development areas to the east, including the new proposed Long Thanh International Airport. With the Thu Thiem Bridge 1 and Thu Thiem Tunnel in operation, and once the other four bridges that are either in construction or planning stages are completed, residents in CBD and neighbouring district will have direct connection to Thu Thiem.
From Thu Thiem, people can reach the National Highway 1A and 51, and also the Long Thanh-Dau Giay Expressway via the East-West Boulevard. The future international airport will also be accessible from Thu Thiem.
Thu Thiem will benefit from the future Metro Line No. 2, which stretches from Thu Thiem (District 2) and ends in An Suong (District 12) with the total length of approximately 19 kilometers. It is forecasted that once complete, the metro line will handle approximately 480,000 passengers per day.
The construction of the Metro Line No. 2 and the four bridges is seen as the government’s determination and commitment to turn Thu Thiem into Ho Chi Minh City’s new financial and residential district. By improving the infrastructure and accessibility to the area, the authority hopes to encourage more developers to invest in large-scale real estate projects here.
Strategically located to benefit from the future growth of the City
#4
#3
#1
#2a
#2b
#2c#8
#5
#6
#7
Time for Thu Thiem 9 8 | JLL
Land-use master plan Site Area (ha) %
Development Site 215.8 32.9%
Public parks 113.9 17.3%
Wetland 103.9 15.8%
Road surface 159.5 24.3%
Water surface 63.8 9.7%
Total land area 657 100%
Development Summary Size Unit
Total parcel 176 Parcels
Total GFA (above ground) 7,563,750 Sqm
Total GFA (under ground) 2,220,379 Sqm
Total NFA - Commercial (*) 2,540,588 Sqm
Total NFA - Residential (*) 2,665,977 Sqm
Net floor area ratio (FAR) 3.5
Residential units 20,426 Units
Residential population 145,393 People
Employee population 217,470 People
Service apartment units 573 Units
Service apartment population 1,719 People
Components of development sites Site area (ha) %
Residential 88.5 41.0%
Commercial 72.8 33.7%
Other facilities 54.5 25.3%
Total land area 215.8 100%
Source: Sasaki Master Plan 2012 & Thu Thiem I.C.A
Source: Sasaki Master Plan 2012 & Thu Thiem I.C.A
No. Key feature Key landmark/public building
1 • High density mixed-use central business district
Convention & exhibition centre, Central square, Opera house, Planning information centre, The river park
2 • High density mixed-use development
Observation tower complex, Sport complex, Local administration centre
3 • Mixed-use residential Thu Thiem museum
4 • Mixed-use residential• High-density
commercial buildings• Low-density residential
and public buildings
Central community hub, Local administration centre, Fire station
5 • Public facilities• Low-density residential
Children’s palace, The “city hall”, Central community hub, Local administration centre
6 • • Low density mixed-use
residential• Mixed-use commercial
International hospital, Central community hub
7 • Marina Complex• Mid to high-rise
residential complex
Urban resort hotel, Marina Complez
8 • Zone of enhanced mangrove landscape
• Dredged and cleaned waterways
Southern delta resort, Aquatic park, Southern delta research
The Thu Thiem new urban area is divided into eight main functional areas, so-called “neighbourhood”. Each
as landscaping and landmark buildings.
Thu Thiem key development parameters
With its clear master plan, disciplined authority, cleared land plots, modern infrastructure and
proximity to the traditional business district 1, Thu Thiem will surely become Ho Chi Minh City’s modern
district, one which is urgently needed.
“”Cosimo Jencks
Chief Representative, Hong Kong Land
(*) Excluded neighbourhood No. 7
Source: Sasaki Master Plan 2012 & Thu Thiem I.C.A
Residential mixed-useResidential high densityResidential low densityCommercialCommercial mixed-useSchoolFunction parkOthers
Land tender process
75,000
< 50,000
> 100,000
GFA (sqm)
M
M
M
M AE
Bus line and StopCirculator Bus line and stopM2 Metro line and stopWater Taxi and stopFerry line and stop
Municipal subway and stationsMAirport Express stationAE
Transport network
Land use by sector
GFA heat map
10 | JLL
13%
24% 43%
11%
Time for Thu Thiem 11
Thu Thiem masterplan
Thu Thiem – A new modern mixed-used developmentThu Thiem is designed to become a new mixed-use development area that combines both residential and commercial hubs. Of the total development site, 41 percent is designated for residential development. In terms of total NFA (excluding residential mixed-use area for resettlement purpose in neighbourhood no.7), both residential and commercial areas enjoy a share of approximately 49 percent and 51 percent, respectively.
Due to its close proximity to the existing CBD, the core area – which consists of Parcel 1, 2a, 2b and 2c—is reserved to become a new financial hub of the city. By integrating the concept of “live-work-play” to Thu Thiem, the city authority seeks to alleviate the heavy traffic, reduce the level of pollution from transportation in the inner city, and create a vibrant living and working environment.
Sasaki’s plan for Thu Thiem incorporates different elements of natural landscape, linkages to the existing parts of Ho Chi minh City, and flexible urban development platform. Key elements for the peninsula are green areas and open space, both of which will consequently increase the value of the Thu Thiem as compared to the existing CBD.
However, the poor soil condition in Thu Thiem remains the main concern for many developers as it requires heavy investment in pilling and foundation structures.
Careful massing of buildings together with meticulous consideration for human scale will allow for a spectacular view of the skyline. These will provide a delightful pedestrian experience and enhance the living experience of residents in Thu Thiem.
Note: The remaining 9% is reserved for public facilities
of total land area is residential
of total land area is commercial
of total land area is road surface
of total land area is natural land and
water surface
Source: Sasaki Master Plan 2012 & Thu Thiem I.C.A
BTBiddingBidding (in the future)City-fundedOthers
Land tender process
Source: JLL Research
CompletedUnder construction (*)Under PlanningOther
11%of total GFA have been completed
12%of total GFA are under construction (*)
62%of total GFA are under planning
Time for Thu Thiem 13 12 | JLL
Approximately, 62 percent of total GFA (above ground) have yet to start construction as some developers face challenges due to the lengthy process of obtaining all necessary legal/planning documentation approval.
We also noted that most of the projects launched so far are residential. The market has yet to record any commercial projects other than the Thaco Complex of Dai Quang Minh, which is expected to complete by early 2018.
Around 71 percent of land parcels (67 percent of total land area and 81 percent of total above GFA) in Thu Thiem have been officially approved The most common way to obtain land in Thu Thiem is through the build-transfer (BT) agreement where land plots are granted to developers in exchange for investing in infrastructure in the new urban area. 45 percent of the total development site area have been officially approved through a BT agreement in which Dai Quang Minh, the developer of Sala project, has been granted the largest land bank in return for constructing four main internal roads (Crescent Boulevard, Central Lakeside road, Saigon Riverside road, the road through ecological forest located in the Southern Delta), Thu Thiem Bridge 2, and a pedestrian bridge. In addition, other parts of Thu Thiem are dedicated to Dai Quang Minh to build a 20-ha Central Plaza and a 9-ha River Park whose 1:500 master plans are in progress.
Similarly, CII was granted approximately 90,000 square metres of freehold land and 6,000 square metres of 50-year leasehold land for residential and commercial purpose in exchanged for the construction of technical infrastructure for the northern residential area which consists of neighbourhood 3 and 4 and the main North-South arterial road.
Phat Dat Real Estate Development JSC has also been approved by the People’s Committee to conduct a study on the construction of Thu Thiem Bridge 4, which will link the peninsula to District 7.
Alternatively, land can be obtained through bidding process. In 2011, the city authority started the first tender for land parcels in Thu Thiem. Prior to 2016, 10 percent of total development site area was granted through bidding process to different consortiums of large investors.
According to the announcement from Thu Thiem Management Authority in Q2 2017, the remaining 16 percent of total development site will be tendered with the focus on five parcels in neighbourhood 2a.
Current land allocation - construction statusCurrent land allocation - land tender process
(*) The JLL definition for a project being referred to as “under construction” will take effect once the process of test piling has commenced. Source: JLL Research
54%total development area allocated
via build-transfer agreement
10%total development area approved
by bidding process
16%total development area planned
for last bidding process
Empire City
Eco Smart City
Cll + Hongkong Land
Others
Time for Thu Thiem 15 14 | JLL
Land valueWith the majority of the total land bank in Thu Thiem confirmed, the remaining available land bank is scarce while the demand for investment remains strong.
Land values within Thu Thiem have increased by 30 to 40 percent within past three years. While this is a considerable uplift, we believe it can be substantiated for the following reasons: (1) initial land values are coming off a relatively low base, (2) the speed of infrastructure construction has increased dramatically during this
period, (3) the most recent residential projects launched in Thu Thiem have witnessed strong demand, and (4) finally Thu Thiem is the largest undeveloped clean and clear, master planned land within the city centre.
On average, Thu Thiem’s land price is approximately one-third of District 1 and relatively low compared to neighbouring districts such as District 3 and 4. In addition to land values appreciating in Thu Thiem, the neighbouring areas in District 2, such as Dong Van Cong, An Phu and Thao
Dien have also witnessed increasing land prices. With rapid urbanisation, the establishment of Thu Thiem projects and some improvement in the legal and planning framework, it is reasonable to say that land prices will continue to increase over the coming years. The largest beneficiaries from this price movement will be the early pioneer investors in Thu Thiem as the higher risks that they had to bear in the early stage of development are compensated.
Project Developers (% equity interest)
Parcel Deal size (US$)
Transaction time
Sale launches Current status
Empire City Keppel Land (40%), Gaw Capital Partners (30%), Tien Phuoc JSC (15%), Tran Thai Real Estate Co. Ltd. (15%)
2.14, 2.15, 2.16, 2.17, 2.18, 2.19, 2.20, 2.21
93.9 million 1H16 Linden Residences: December 2016Tilia Residences: July 2017
• Master plan 1:500 approved
• Undergoing piling test
Eco smart city
Lotte Asset Development, Lotte Shopping, Lotte Hotel and Lotte E&C
2.1, 2.2, 2.3, 2.4, 2.5, 2.6
Undisclosed 1H17 Not yet • Singed the contract with People’s Committee of HCMC in July 2017
• Planning stage
Undisclosed CII (36%) and Hongkong Land (64%)
Undisclosed Undisclosed Ongoing Not yet • Memorandum of Agreement signed in July 2017
• Master planning
Source: JLL Research
Notable transactions and land value
Source: JLL Research
District 2
Binh ThanhDistrict
District 5
District 10
District 4
District 7
Thu ThiemDistrict 1- CBD
District 3
> 3,000
> 2,750
> 2,500
Ho Chi Minh City District 1 Thu Thiem
0
1,000
2,000
3,000
4,000
5,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
US$/sqm
Ho Chi Minh City District 1 Thu Thiem
2,000
0
4,000
6,000
8,000
10,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Units
Time for Thu Thiem 17 16 | JLL
High-end apartments target market for Thu Thiem• Launched in 2015, Dai Quang Minh’s Sala project has sold
95 to 100 percent and recorded a 30 to 35 percent increase in sales prices compared to when the units were first launched.
• The Empire City project commenced a soft launch in December 2016 and a subsequent launch in July 2017, with the projects named as Linden Residence and Tilia Residence, respectively. Both residential projects, totalling up to approximately 1,000 units, are almost sold out within the first few weeks of the launch. The average selling price of Tilia increased by approximately 20 to 25 percent in comparison to Linden during six months. This increment is not only because of Tilia’s closer proximity to the Saigon River and better quality in terms of design and construction, but also a reflection of high demand for the project.
• With a booming high-end residential market and the abundant opportunities for commercial development, District 2 has become the focal point for large-scale developments in the past three years. Because of the quality of the master plan and the proximity to District 1, Thu Thiem is possibly the most attractive part of District 2.
Could new supply threaten an increase in prices? • Despite the recent increase in transaction volumes and
price, we believe that the current cycle has yet to reach its peak. It is forecasted that the supply of apartments in Thu Thiem area will rise in the coming years as a new wave of luxury branded apartments from major investors is expected to hit the market. This new wave of supply might establish a new price level in Thu Thiem as the urban area becomes more developed with value-added services, such as schools, hospital, entertainment centres, etc.
• The apartment selling price is predicted to keep on rising, and we expect that this uptick will be an offset, helping the investors achieve the expected return in the context of land prices increase.
• Given a growing economy with strong demand from the buyers who either have cash-on-hand or the ability to leverage, it is likely to see that the buyers are taking a long-term view in their purchase decision, which is a positive sign for Thu Thiem.
• There are still plenty of investors hunting for good investment opportunities in Thu Thiem at a reasonable land price through acquisition or joint venture with good local partner. Hence, we expect this trend will support a strong sustainable growth in this focal development of the city.
High-end apartment primary selling price in Ho Chi Minh City heat map
Figure 3: High-end apartment units launched
Source: JLL Research Source: JLL Research
Figure 2: High-end apartment primary selling price
No. Developers Projects Building No. of units (*) Sales rates Average latest asking price Launch time
1
Dai Quang Minh Sala phase 1
Sarimi 368 sold out 2,850 - 2,950 3Q15
2 Sadora 605 > 95% 2,200 - 2,300 2Q16
3 Sarica 130 sold out 2,850 - 2,950 3Q16
4 Sarina 186 > 95% 2,850 - 2,950 4Q16
5 Keppel Land, Gaw Capital, Tran Thai, Tien Phuoc
Empire City Linden Residences 510sold out 2,900 - 3,000 4Q16
6 Tilia Residences 472 > 95% 3,400 - 3,500 3Q17
Residential market performance
Source: JLL Research(*) Latest asking price are based on 3Q17 primary price for launching projects. For sold-out projects , asking price was recorded from secondary market at 3Q17.
35%
Main infrastructure1
37%
External connection2
44%
Internal connection3
1 As per master plan, main infrastructure consists of Thu Thiem water plant, sewage treatment plant, rainwater drainage and levelling, electricity and telecommunications. 2 As per master plan, external connection consists of East-West Boulevard & Thu Thiem tunnel, Thu Thiem 1, 2, 3, 4 bridge, pedestrian bridge; URMT, bus routine and ferry boat. 3 As per master plan, internal connection consists of four main internal roads (Crescent Boulevard, Central Lakeside road, Saigon Riverside road, the road through ecological forest located in the Southern Delta), North-South road, square road, four urban canals, water taxis, and other internal roads.
Source: JLL Research, Sasaki Master Plan 2012.
Time for Thu Thiem 19 18 | JLL
Why is the strong interest not equating to faster development?
In the early stages when the city government started master planning Thu Thiem, many investors expressed a keen interest to participate in many projects in the peninsula. These investors included Lotte, GS, Sama Dubai, Bouygues, TECO, Urban Development Investment Corporation, The Consulates of Singapore, Thailand and New Zealand. However, during the very early stages, the overall planning of the project was still incomplete, the legal framework was not established, and, most important, the land price was relatively high when compared to construction density and plot ratios which were relatively low and infrastructure was non existent.
Over the following 10 years, the rate of development in Thu Thiem remained stagnant mainly because of land compensation issues. Only recently, in June 2017, 99 percent of the total land bank in Thu Thiem became fully compensated, according to the District 2's Resettlement Committee. 87 units have yet to be compensated which includes 83 households and 4 religious establishments.
The other main reasons for the slow development progress in Thu Thiem related to infrastructure and policy/incentives. After the Thu Thiem Tunnel completed construction in 2011, the city authority realised the importance of the private sector to support infrastructure for this landmark development project. The city authority decided to enter several BT agreement contracts to build the rest of the main infrastructure of Thu Thiem. Since then, the development of infrastructure has gathered pace. In the first half of 2017, JLL recorded the progress of infrastructure development in Thu Thiem as below:
In term of policy/incentive, the lack of attractive business environment is another factor that dampens the attractiveness of Thu Thiem. Many investors revealed that it was difficult for them to estimate the investment timeline and return due to the slow and lack of transparency involved in the investment procedure. In addition, developers, especially those with a strong investment appetite for commercial properties, are still waiting for more preferable policies or incentives to be implemented for this area.
Besides the "hard infrastructure" developed during the last few years and a well master planning guided by the government in Thu Thiem, investors and the local community are beginning to recognise the strong growth potential of the area. However, to make it a desirable place to live, work, play and learn, Thu Thiem new township will need soft infrastructure such as convention and exhibition centre, schools, healthcare facilities, outdoor sport facilities, entertainment… to become a truly new international financial, service and urban centre of Ho Chi Minh City.
“
”Nhan Vo General Director, Empire City JV
Time for Thu Thiem 19
Factors of success
• Considered as national priority project
• Preferential policies and tax applied
• Basic infrastructure in place and continuously developed
• Having special free trade zones
Established year
1990
Total land (ha)
2,800
Core area Lujiazui‘s Central business district (ha)
170
Time for Thu Thiem 21 20 | JLL
Regional Case Studies
Lujiazui Finance and Trade Zone, Pudong, Shanghai, China
Shanghai has served as a gateway of China toward the outside world, geographically and economically. Under heavy pressure to undertake drastic urban transformation because of the growing housing supply shortage, the deterioration in living conditions, as well as fierce global competition, the expansion of the traditional Puxi CBD in Shanghai was needed in the 1990s.
Before 1990, Pudong was home to harbour industry, low-quality housing, insufficient infrastructure and vast farmland stretches. The transformation of Pudong, from a poor and undeveloped area into an energetic country town, serves as one of the best examples of the large-scale urbanisation process in China, particularly and in the region generally. As a part of Pudong master plan, Lujiazui Financial and Trade Zone (also known as Greater Lujiazui) and its 170-ha waterfront area (also known as
Little Lujiazui) is identified as the core area of Pudong’s development and also the site for the extension of the historic downtown district of Shanghai across the Huangpu River.
With all the favourable policies and incentives provided and relatively cheap land price, Pudong became the perfect choice for both new developments and relocation projects. The area’s real estate market has grown dramatically, taking an increasing share of Shanghai’s office space, housing and industrial buildings, and played a more and more crucial part in Shanghai’s real estate market.
Although the Pudong development initially aimed to encourage economic growth and serve as a pilot project for the reform of the Shanghai market, it is undeniable that property development and the growth of the real estate market would play a key role.
Lujiazui Finance And Trade Zone Key Development Figures
0
50,000
100,000
150,000
200,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2H17
Greater Lujiazui Traditional Puxi CBD
RMB/sqm
43.2%
88.7%72.5%
4
9
14
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2H17
19.8%
RMB/sqm/day
Greater Lujiazui Traditional Puxi CBD
Time for Thu Thiem 23 22 | JLL
“”
Starting at higher level, properties in Pudong have been able to achieve premium value and more favourable growth
rate compared to its peers in traditional city centre.
Pudong's development timeline
1995 Main development phase
1990 Initial phase
2000 Continuous development
Management:• Develop Pudong and Shanghai as the
international financial centre and the international shipping centre (2009)
Management:• Shanghai Pudong International
Airport Preparatory Office opened (1995)
• Shanghai Pudong Customs and Waigaoqiao Free Trade Zone Customs opened (1995)
• The"one-stop"service of investment project examination and approval launched (1996)
Management:• Pudong Development Office of
the Shanghai Municipal People's Government opened (1990)
• Shanghai Pudong Development Planning & Research Institute opened (1990)
• Shanghai CCP Pudong New Area Working Committee and Shanghai Pudong New Area Management Committee inaugurated (1993)
Notable investment activities:Real-estate related:
− Signed the first land leasing agreement for building Yu'an Mansion (1991)
− Shanghai Pudong granted the first commercial land at US$900 psm to 99 Corporation, Shanghai Shenda Company and Huangpu Real Estate Development and Management Company (1991)
Business-related: − The Agricultural Bank of China Pudong Branch opened, followed by set up of major specialised banks (1990)
− First large-sized joint venture in Shanghai Pudong founded (1992)
− First wholly owned foreign trade company set up (1992)
− Jinmao Mansion Tower, the first super high-rise building in country, put into construction (1994)
− Start construction of the landmark Oriental Pearl TV Tower, a symbol of Pudong (1991), project completed in 1995
Notable investment activities:Real-estate related: Start construction of
− Yinguan Building
− Super Brand Mall (US$ 300 mil.)
− Shanghai International Convention Center
− Yuanshen Sports Center
Business-related: − The Fuji Bank Shanghai Branch, China's first foreign-funded bank, opened (1995)
− Entrance of more big names, including: Intel Corporation, Shanghai Siemens Communication Terminal Company, Shanghai Hitachi Electrical Appliances Co., Ltd, (1995)
− More new big banks moved to Pudong and started RMB business pilot project (1997)
− Shanghai Securities Exchange
− The 5,000th foreign-funded enterprise settle down in Pudong
Infrastructure development: Completion of basic strategic infrastructure
Infrastructure development: Completion of strategic infrastructure and a number of civil engineering projects completed
Infrastructure development: Bring Pudong infrastructure to more sophisticated level. Upgrade and expand existing infrastructure development
Notable investment activities:Real-estate related: Completion of
− Bocom Financial Towers
− Shanghai World Financial Tower
− Shanghai Tower
Business-related: − Citigroup Tower, head quarter of Citigroup Inc., opened
− The People's Bank of China Shanghai branch was inaugurated, speeding up the building of Shanghai to be an international financial centre
− More than 10,000 foreign-funded enterprise settling down in Pudong
− Approx. 100 regional headquarters of multinationals were granted certificates
− Shanghai Petroleum Exchange, Shanghai Diamond Exchange, China Financial Futures Exchange opened in Jinmao Mansion
− Shanghai World Financial Center, the world's highest flat roof building at 492 metres, opened (2008)
Figure 4: Shanghai prime apartment selling price
Figure 5: Shanghai Grade A office rental rate
Source: JLL Research
Time for Thu Thiem 25 24 | JLL
Officially being developed since 1998 from a military fort, Bonifacio Global City (BGC) has quickly become a modern and well-planned residential, business and lifestyle centre. BGC’s development started with the privatisation of a large portion of Fort Bonifacio and the development of apartments, driven by demand generated by huge office developments in its established neighbour, Makati central business district.
With the idea of a “walkable city”, BGC is divided into six districts with a grid system of streets, following those of the most advanced cities in the world, which makes the city easy to navigate. At BGC, people can get instant access to green space and public transportation from any point in the city. With an insightful design, the entire BGC district brings a dramatic increase in the land value. Each property in BGC is designed to heighten the quality of life and, thus, is envisioned to be appreciated over time.
BGC is a showcase for successful public-private partnership projects in the Philippines. The development of the 214-hectare project is overseen by the Fort Bonifacio Development Corporation (FBDC), which embodies the public-private partnership between the state-owned and controlled Bases Conversion and Development Authority (BCDA), Ayala Land and the Campos Group of Evergreen Holdings.
Nowadays, BGC is still developing following its master plan. It is well-known as a rising magnet for investments, a premier business address besides the existing country’s central business district, and one of the most sought-after areas in Metro Manila for elite living and high-end commercial space.
Zone Key feature
North Bonifacio • High-class residential buildings• Park/recreation developments
Cresent Park West • Residential buildings (Forbes Town Center)
Bonifacio Centre • High-tech offices• High-class residential buildings• Retail outlets • Pedestrian-friendly roads and walkways
Station Square East • Transit and pedestrian-oriented entrance to BGC• Business convention• Retail spaces
University Park • Campus zone for institutions• International schools• Universities
Bonifacio South • First-phase luxury residential buildings• Transition from suburban to urban
Bonifacio Global City – Manila, Philippines
Factors of success• The development is overseen by one single entity, the Fort
Bonifacio Development Corporation (FBDC)
• Lower taxes and business-friendly
• Offering Economic zone and Philippine Economic Authority Zone (PEZA), a government agency, is created to encourage investments by providing incentives to investors in the form of tax holidays, discounts, etc.
• Efficient infrastructure development, both connecting and inner-city, mainly developed via public-private partnership
Established year
1995
Total land (ha)
214
Source: Website of Area South
Makati Bonifacio
80,000
100,000
120,000
140,000
160,000
180,000
200,000
PHP/sqm
2008 2009 2010 2011 2012 2013 2014 2015 2016 2H17
Makati Bonifacio
PHP/sqm/month
400
600
800
1,000
1,200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2H17
2011 - 2H17 CAGR
BGC 7.8%
Makati 7.8%
2011 - 2H17 CAGR
BGC 7.0%
Makati 3.8%
Time for Thu Thiem 27 26 | JLL
Bonifacio Global City Development Timeline
Bonifacio Land Development Corporation
(BLDC), led by Metro Pacific, won the bid to
become BCDA’s partner in developing Bonifacio
Global City
Fort Bonifacio was turned over to the Bases
Conversion Development Authority (BCDA), a
government-owned and controlled corporation
Ayala Land Inc. and the Campos Group’s
Evergreen Holdings Inc. bought controlling stake
in BLDC from Metro Pacific and, together with
BCDA, formed the Fort Bonifacio Development
Corporation (FBDC), which now oversees the master
planning of BGC
A new master plan of Bonifacio Global City was
launched
2003 20061992 1995
• All types developed with strong influx of capitals
• Key developers: Mega World and Ayala Land
Initial Development StrongDevelopment• Mainly infrastructure and residential
• Focus on Cresent Park West area, a closer part of GBC to Makati city, to benefit from the growing demand for residential and commercial properties in this traditional CBD area
Source: JLL Research
Figure 7: Metro Manila Grade A office rental rate
Figure 6: Metro Manila prime apartment selling price
2002
2012
2015 2016 2017
2013 2014
2008 2010 2030
Time for Thu Thiem 29 28 | JLL
Although officially planned since 2005, it took two years to complete the first bridge, and another four years to complete the tunnel, the second connection between Thu Thiem and the city’s downtown area. Compared with Pudong or Bonifacio Global City, market factors aside, the paucity of support for infrastructure development and lack of preferential policies/incentives are the biggest impediments to Thu Thiem's development.
Nonetheless, it is also observed that in these cases, it took time for the initial steps to be accomplished. As soon as the infrastructure development takes shape, the market will respond. Developers will be more confident and occupiers and buyers will be attracted to this rising opportunity.
As a late starter, Thu Thiem has the advantage of having an advanced master plan and learn from the experience of other cities. The authorities are able to introduce “smart city” schemes and Thu Thiem will become Ho Chi Minh City’s premier destination for residential and commercial development. As Thu Thiem gathers pace and becomes a magnet for investors, we strongly believe the next decade will see a “Thu Thiem skyline.”
2030 Vision
We believe Thu Thiem will become the future destination of the city and will accelerate the transformation of
Ho Chi Minh City into a modern megacity.“
”Yun, SungjunChief Representative, HCM Office, LOTTE Asset Development Co., Ltd
Sources: Photos taken from Google Earth
30 | JLL
Key contacts
Stephen Wyatt
Khanh Nguyen
Trang Le
Country Head - Vietnamstephen.wyatt@ap.jll.com
Associated Director, Capital Markets - Vietnamkhanh.nguyen@ap.jll.com
Manager, Research and Consulting Servicetrang.le@ap.jll.com
Dao PhanSenior Analyst, Research and Consulting Servicedao.phan@ap.jll.com
JLL Vietnam officesHo Chi Minh City 26/F, Saigon Trade Center 37 Ton Duc Thang Street, District 1, Ho Chi Minh City Tel +84 8 3911 9399
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