HCMC developing underground projects

09:00 | 20/07/2018 Economy

(VEN) - Ho Chi Minh City is developing underground spaces, promising a new wave of investment by real estate companies.

hcmc developing underground projects
The project to build an underground parking lot in the area of the Le Van Tam Park has remained on paper for years due to a lack of appropriate policies governing investment in them

New investment channel

The Ho Chi Minh City Department of Planning and Architecture is finalizing an underground space development plan, focusing on the central area (930ha) and the Thu Thiem New Urban Area in District 2. Apart from major projects, such as the underground traffic system connecting Ben Thanh Terminal with the Saigon Opera House Terminal (Metro Route No. 1), and underground pedestrian walkways in District 1, the department will develop more than 10 other underground projects alongside metro lines that are under construction.

Savills Vietnam, a property market research firm, believes the plan will create opportunities for real estate investments in underground infrastructure projects. About 1,600 buildings in Ho Chi Minh City have basements and semi-basements with an estimated total area of 11ha.

Le Hoang Chau, President of the Ho Chi Minh City Real Estate Association, said underground space development will be a new investment channel for local real estate companies, in particular, and investors, in general. Developing underground space is crucial in the context of rapid urbanization. Underground property is therefore expected to be a hot segment of the real estate market in the next several years, attracting retailers and catering service providers.

Policy and credit needed

Although it is a potential market segment, it is difficult to attract investment in underground space development. The cost of investment in an underground project is triple that of a project above ground, Le Hoang Chau explained. To encourage investors, the municipal government should apply appropriate policies to facilitate their access to land and capital resources.

Chau gave an example: four underground parking lot projects are unable to find investors despite the completion of the planning work. Although they are interested in these projects, some investors have backed away due to a lack of clarity in policies and procedures. Moreover, the quota of bank loans for real estate investors is limited.

A lack of data is another problem facing underground project investors in Ho Chi Minh City and the rest of Vietnam. In some cases, investors have to cease construction due to the presence of cables or water pipes in the underground area where their projects are based.

Thuy Duong