How Ho Chi Minh City’s New Construction Master Plan by 2040 Affect its Housing Market

Since the early 1990s, the framework of Ho Chi Minh City’s Construction Master Plan was introduced, with the inaugural plan being approved in 1993; it has been revised and updated every 5 years since then, with the current revision ratified in January 2010 and designed to guide the development of the city until 2025. In 2021, the municipal government of Ho Chi Minh City (HCMC) has been tasked with adjusting its Construction Master Plan through to 2040 with a vision to 2060. This article will review how much the current (2010 to 2025) Construction Master Plan has materialized, its impact on the current Ho Chi Minh City housing market, and predict how the proposed new (2025 to 2040) Construction Master Plan will affect HCMC’s housing market in the future.  

▸ 1. Ho Chi Minh City’s construction master plan 2010 to 2025: polycentric expansion.

As HCMC continues to progress, there is an increasingly pressing need to put in place a legitimate yet practical urban master plan to provide guidance to its future spatial development and urban renewal. 2010 to 2025 urban master plan replaces its limited 1998 predecessor and the inaugural master plan of 1993. This time, Vietnam’s state government was enlightened enough to move away from closed-door in-house planning to engaging foreign experts in urban planning from Japan and France to provide the necessary studies, framework, and advice.

By 2025, Ho Chi Minh City is expected to reach approximately 10 million residents and with a coverage of over 100,000 hectares of urban land area, thus the underlying long-term vision of Ho Chi Minh City’s construction master plan 2010 to 2025 is to turn it into an overall balanced city. Details of the plan include: Conserving historical and cultural heritage, and maintaining local and national identity; Preserving valuable national and environmental resources; Improving the city’s accessibility by installing an efficient mass transit system; Planning more efficient use of the land area in order to accommodate future growth.

The strategic objective of the urban plan is to undertake the expansion of HCMC by way of polycentric development in creating satellite urban regions that are to be interconnected with mass transit; the idea is to decentralize functions from the city’s inner-city core (central business district) to the new regional urban areas with multi-purpose integrated functionality and is so doing de-densify the city’s central business district; the old downtown will function as an administrative, cultural, tourist and service center. 

These satellite urban regions would typically include high-density mixed-use developments for commercial, industrial, residential, and public use; each region with a distinct purpose and character of its own. In order to create these satellite urban regions, Ho Chi Minh City will extend outwards from its inner-city area in 4 directions along growth corridors:

• The eastern corridor: running along the HCMC-Long Thanh-Dau Giay Expressway, connecting with Nhon Trach, Long Thanh, and Bien Hoa urban centers;
• The southern corridor: running along Nguyen Huu Tho Road, linking urban areas along this route up to the Hiep Phuoc port urban area;
• The northwest corridor: running along National Highway 22 and connecting with Duc Hoa, Trang Bang, and Thu Dau Mot urban centers;
• The west-southwest corridor: running along Nguyen Van Linh Boulevard linking urban areas in the southern part of the city.

These new districts are reserved for modern housing, underground parking space, scientific-technological centers (800 hectares in total), and industrial zones. Besides, the city plans to allocate around 43,600 hectares in its outskirts for agricultural production and three ecological zones. These growth corridors will be the impetus whereby the planned satellite urban regions (in accordance with the master plan) will develop and play an increasingly important role in decentralizing key socio-economic functions away from HCMC’s inner-city and alleviating the urban problems plaguing the city due to population overcrowding.              

Additionally, the urban planning for HCMC is also part of a wider strategy that has been approved by the government to integrate the city into the larger Greater Ho Chi Minh Metropolitan Area (not to be confused with Vietnam’s southern key economic region) in connectivity with its adjacent provinces of Binh Duong, Binh Phuoc, Dong Nai, Ba Ria-Vung Tau, Tay Ninh, Long An, and Tien Giang.

The overall transport network was planned to connect new urban areas, satellite urban regions, and industrial zones in Ho Chi Minh City in a synchronized manner, and facilitate the best possible exploitation of the socio-economic potentials of the whole Greater Ho Chi Minh Metropolitan Area. 

The road network planned up to 2025 will include centripetal routes for interconnectivity with adjacent provinces (national and provincial highways), ring roads, and arterial internal roads. The road networks will be supplemented by waterways for river taxis, railway upgrading, mass rapid transit (metro) lines, and two separate airports (the existing Tan Son Nhat and new Long Thanh airports).

▸ 2. A look at how much of HCMC’s 2010 to 2025 master plan has materialized?

The construction master plan of HCMC through to 2025 is at the heart of the city’s urban renewal initiative as it addresses problems that are hampering its development into a world-class metropolis. Through its implementation, HCMC has achieved significant improvement in urban infrastructure, the city’s performance in this category however is still considered to be below average compared to other cities. Problems still persist in the fields of transport infrastructure, traffic congestion, and flood prevention, despite the city’s grand plans.

While enjoying success in finishing the widening of arterial roads, overhead bridges, junctions, and putting into operation new river crossings, a greater majority of announced infrastructure works have been left in limbo due to problems with land clearance and funding. A glaring example would be that HCMC was supposed to complete 3 ring roads spanning 356-kilometers to alleviate traffic congestion in the inner-city, but to date, only a total of 71-kilometers have been completed. HCMC has been struggling with traffic congestion for years. The number of personal vehicles today has surged with 825,000 cars and 8.12 million motorbikes, while public transport remains underdeveloped.

The highly anticipated first metro line in Ho Chi Minh City running between Ben Thanh Market in District 1 and the New Eastern Bus Interchange in District 9 has been continuously delayed resulting in cost overruns, at the end of 2020 about 82% of the project is estimated to be completed. Since construction began in 2012, Metro Line 1 that runs a 19.7-kilometers route has faced many problems, including slow disbursement of funds and a personnel crisis. A total of 8 metro lines running a total of 220-kilometers are slated to be built, but the process has been painfully slow. 

In the urban environment, HCMC has managed to reclaim slums and squatter dwellings along canals in the inner-city core but has not been able to push through with this initiative in the wider confines of the city. HCMC has by far managed to prevent further urban sprawl despite rapid growth and is putting in the effort to protect and create open green spaces. At the municipal level according to the construction master plan, 4 satellite urban regions revolving around an inner-city region are slowly taking shape:

• Inner-city region: In order to ensure proper use of state land as part of urban planning, many illegal land transactions and usage have been investigated in HCMC’s inner-city area. There is a clear demarcation now between the inner-city core (central business district) and its periphery (the rest of the inner-city).
• Eastern corridor: This region has been consolidated into a centralized administration named Thu Duc City (a city-level administration within HCMC). So far, the eastern satellite urban region has developed hi-tech industries, research, and academia.
• Southern corridor: Has created the Saigon South Urban Area (centered around Phu My Hung neighborhood), with urban development sprawling outwards from Phu My Hung neighborhood and slowly moving further south towards Hiep Phuoc port and the export processing zones.
• Northwest corridor: Planned around Tan Thoi Nhi neighborhood in Hoc Mon District is supposed to develop a service-based economy, ecological tourism, high-tech agriculture, and new residential areas, but such developments have not taken shape yet.
• West-Southwest corridor: Planned around Tan Kien neighborhood in Binh Chanh District will consist of industrial parks, service industries, and residential areas, but progress has been very slow, there are still large land areas that have been left undeveloped.

As HCMC’s construction master plan of 2010 to 2025 has emphasized development on the 2 primary growth corridors to the East and South, the municipal authorities of HCMC have prioritized investments into infrastructure upgrading and developments in these directions, with the other 2 secondary growth corridors (West-Southwest and Northwest) lagging far behind in terms of urban development. From 2010, around 70% of total investment capital poured into HCMC has been allocated to the eastern part of the city.

Thus, we can see that an eastern satellite urban region (Thu Duc City) is starting to take shape and with the administrative consolidation is expected to lead urban development in Ho Chi Minh City. Although Thu Duc City is still a work in progress, it is clearly developing according to HCMC’s urban master plan. The same cannot be said for the southern satellite urban region (Saigon South Master Plan), whereby to date the established management authority in 1997 to implement the master plan has been ineffective. Urban development in the south has been hampered by the allocation of pieces of land that have been fragmentally divided to many private developers to build different types of real estate and sell them quickly without concern for infrastructure or amenities, and more importantly not in line with the urban master plan. Only the Phu My Hung neighborhood can be considered a success.

Despite polycentric expansion still being limited in Ho Chi Minh City due to uncompleted urban infrastructure plans and bureaucratic red-tape delaying the execution of real estate projects, there is enough evidence to determine that the current and projected urban development of HCMC is in line with its current master plan despite progress not as fast as expected. More positively, the construction master plan of 2010 to 2025 is being consistent with current urban trends in the world and provides a good blueprint to guide HCMC’s future urban development and its upcoming new master plan.

▸ 3. How did 2010 to 2025 urban plan impact HCMC’s housing market?

From 2009 to 2019, HCMC’s population has grown by 1.8 million people and in 2019 have an average floor area for housing of 20.1 square meters per person (up from 16.6 square meters in 2009). By 2025, HCMC is expected to have a total floor area for housing of 237.3 million square meters or an average of 23.5 square meters per person. Most of the housing supply was located in the 4 satellite urban regions with Thu Duc City in the east and Saigon South Urban Area in the south making up the majority as HCMC continues to decentralize from the inner-city. 

The 2010 to 2025 construction master plan of HCMC resulted in its inner-city core experiencing little to no population growth despite being very dense, while its peripheral areas (the rest of the inner-city outside the core) are registering stronger growths with lower density. In contrast, all the population growth is expected outside of HCMC’s inner-city in the city fringe areas such as the East and South growth axis. By 2025, the core inner-city population is expected to decline further, with the rest of the inner-city population growth rate moderating out (slowing down) as well, while all the growth is focused in the satellite urban regions.

Population growth in the satellite urban regions has led to high housing demand and that is where residential property prices have risen the most especially in neighborhoods with short traveling times and close proximity with the inner-city core, where most companies are still located. Thu Duc City and Saigon South have priority for urban infrastructure investments and as such demand and housing prices tend to have the highest rate of increase there; In the beginning, developers only built mid-end apartment buildings and sold land plots. With the upgrading/completion of urban infrastructure works and public amenities, the satellite urban regions became more desirable for living and the residential real estate market became more vibrant; premium and luxury housing have dominated supply.

For the west-southwest and northwest satellite urban regions, urban infrastructure and public amenities work have not kept up with the more illustrious eastern/southern urban regions, travelling time into HCMC’s inner-city core is much longer due to the sheer distance. As such average housing prices have not been able to match up; the housing segments found in these satellite urban regions are affordable to mid-end. 

Regarding HCMC’s inner-city, the core has for some time now experience an extreme shortage of housing projects as a result of a temporary halt in new projects approval and ongoing investigations into the illegal transfer and use of land there. The supply shortage has led to a marked increase in housing prices all around the inner-city; the new residential real estate projects there tend to be in the luxury segment in order to justify high land costs. Recently, there is also an emergence of a whole new housing segment: the ultra-luxury segment. As HCMC’s population continues to move outwards from the inner-city in order to capitalize on the better quality living environment and comparatively more palatable home prices, demand for inner-city residential real estate is driven by property investors.

▸ 4. Ho Chi Minh City’s construction master plan 2025 to 2040.

Ho Chi Minh City’s upcoming new construction master plan for 2025 to 2040 covers ​​209,500 hectares and is planned with a vision to 2060 whereby the city envisions itself to be a city of innovation, creativity, and dynamism; a pioneer for the larger Ho Chi Minh Metropolitan Region. HCMC has set a goal by 2060 to become a city with the highest quality of life and attractive working environment, diversified culture, heritage conservation, scenic river-ways, sustainable urban infrastructure, and climate change adaptation; a center for academia-finance-international trade in Vietnam and service hub for the Asia-Pacific region.

HCMC is expected to have more than 13 million people by 2040 and reaching 16 million by 2060; at the forefront of HCMC’s upcoming new construction master plan for 2025 to 2040, will be a focus on developing HCMC to become a smart city; developing Thu Duc City to become a hi-tech and innovative urban area; developing the Can Gio sea-reclamation urban area; Building-up 4 of HCMC’s suburban districts into urban districts.

The plans also envisage developments alongside the HCMC-Long Thanh-Dau Giay Expressway in the eastern satellite urban region – Thu Duc City (Formerly Districts 2, 9, Thu Duc), and building new urban areas along the Hanoi Highway. Technical infrastructure will be improved to bolster water drainage in the southern growth corridor (Districts 7, Nha Be), a region with a lot of available land for urban development and many rivers and streams. The city also seeks to develop urban areas in the northwest growth corridor (Districts 12, Hoc Mon, Cu Chi) with the appropriate urban infrastructure, and improve technical infrastructure in the west-southwest growth corridor (Districts Binh Chanh, Tan Phu, Binh Tan).

The revised master plan submitted to the municipal government focus on laying the foundations of Thu Duc City covering 21,156 hectares; the new city is planned to accommodate 1.5 million people by 2030, 2.2 million people by 2040, and 3 million by 2060 (it currently has a population of more than 1 million people) with 18,930 hectares of land for urban construction by 2030 and 19,994 hectares by 2040. Under the plan, Thu Duc City will implement major projects to create an innovation ecosystem based around 6 innovation hubs to assist in the growth of HCMC and support the economic/industrial hubs within the Greater Ho Chi Minh Metropolitan Region. They are an IT and edutech hub based in the University Village, an automated manufacturing hub based in Saigon Hi-Tech Park, a future hub based in Truong Tho, a fintech hub based in Thu Thiem, sports and wellness hub based in Rach Chiec, and Ecotech hub based in Tam Da.

Key projects include building the Quang Trung Thu Duc Software Park, Advanced Technology and Innovation Centre (under the Department of Science and Technology), High-Performance Computing Centre, Creative Start-up Centre, Advanced Research Institute (under the National University of HCM City), and Centre for Research and Pharmaceutical Production Products, Thu Thiem Financial Centre, International Exhibition Centre, National Culture and History Park, amongst others.

Can Gio coastal urban area will be expanded from 600 hectares to 2870 hectares and has a target of developing into an ecological urban area with a shift in its economic structure to hi-tech agricultural, industrial services, and trade; promote a sea-based economy and focus on tourism as a key industry. Strategic projects that have been approved by the city’s authorities are expected to boost the economic and social development; especially the Can Gio sea-reclamation tourist area, Can Gio Bridge, upgrading of Rung Sac road, and Can Gio-Vung Tau ferry port.

Under the new adjusted master plan, HCMC is expected to reach targets of completing the infrastructure system connecting the city and neighboring provinces and other regions; developing an integrated and multi-functional urban area with transit-oriented development and high-capacity public transportation system; forming cores of new urban areas and hubs for academia, health, culture, education; creating a foundation for a multipolar city; ensuring adequate housing and public services for residents; providing a clean environment, all by 2040.

▸ 5. How HCMC’s 2025 to 2040 master plan will affect its future housing market?

It has been forecast that during the next ten years from 2021 to 2030, HCMC’s population is expected to increase by 2 million persons. Therefore, municipal authorities will execute the program “Building the housing development in HCMC for the 2021-2030 period” to meet the increasing demand for housing. A total floor area of 295 million square meters of housing is to be constructed by 2030 implying an average floor area of 26.5 square meters per city resident. The city will renew (renovate) its inner-city districts, build commercial centers around metro stations, and develop urban infrastructure in all directions in the next six years.

HCMC will continue to restrict the development of new housing projects in its inner-city core which was initiated as part of the existing construction master plan and only encourage the development of housing projects when it is in sync with the existing urban infrastructure. Districts 4, 5, 6, 11, and Phu Nhuan within the inner-city which have experienced a declining population over the past 10 years, will follow the example of the inner-city core in limiting new housing, especially high-rise apartment projects until its urban infrastructure has improved.

Meanwhile, new housing and high-rise apartment projects will be prioritized in Districts 2, 7, 9, 12, Thu Duc, and Binh Tan, especially along public transport routes, such as the city’s first metro line. As for the outlying suburban districts of Cu Chi, Hoc Mon, Binh Chanh, Nha Be, and Can Gio, HCMC will prioritize developing housing projects in towns, rural areas, and residential neighborhoods connected to major roads. In addition, city authorities will facilitate tourist sites, resorts, new urban areas, and satellite urban regions for development.

As decentralization takes place at a more rapid pace and scales due to the implementation of the newly revised construction master plan from 2025 to 2040, less reliance on travel into HCMC’s inner-city core as its functions are duplicated in new urban areas and specialized hubs with specific purpose are created in the satellite urban regions enabling these regions to finally fulfill their planning purpose. Being integrated with all the functions of life, work, play and study, there will be an increase in the desirability of living in these urban regions and demand will partially lead to an increase in housing prices.

Despite being located in the peripheries of Ho Chi Minh City far from the inner-city core (central business district) as compared to the rest of the inner-city districts, the average increase in residential real estate prices in new urban areas located in the intended satellite urban regions is expected to be higher as the new master plan materializes. The value will be higher for residential real estate in new urban areas versus that of surrounding isolated developments in District 7 primarily due to urban planning, construction activities, marketing, and urban services. With the new construction master plan by 2040 providing for public amenities in the satellite urban regions, this helps to push up the overall real estate prices of housing in the new urban areas.

As for Ho Chi Minh City’s inner-city core, the scarcity of land and the limitation of housing projects will maintain the highest residential land and housing prices in the city, however as urban infrastructure cannot resolve the challenges of a growing city, general demand will fall and housing supply will be skewed towards high-net-worth individuals.