The metro system under construction in Ho Chi Minh City is triggering a real estate development boom as the prospect of easy transport has been raising land prices, property research firm CBRE said in a new report.
Ho Chi Minh City has plans for six metro lines, depicted as bold colored lines on the map.
Construction of the first one between Ben Thanh and Suoi Tien in District 9 started in December 2013. Work on the second linking An Suong and the new urban area Thu Thiem in District 2 rolled out early this year.
Both are expected to have trains running from 2020.
CBRE’s new report suggested that the metro lines are going to bring noticeable market changes to areas around the transit stations, which include a surge in land prices and a real estate development boom.
Its analysis found that the number of apartment buildings increased in areas close to the planned stations in the last three years.
The average growth in District 2 was 36 percent, compared to 10 percent in District 7.
It predicts the supply in Districts 2 and 9 will surge by 58 percent and 200 percent in 2017.
Dramatic price changes are expected as well.
The report said properties in the metro line areas including Districts 2, 9, Thu Duc and Binh Thanh are selling at a “modest” 2 to 5 percent extra, compared to the prices of similar facilities in the other areas in the city.
But when the metro lines come into operation, the price gaps could expand to 10 or 20 percent.
Land prices around metro line stations are already surging higher than elsewhere.
The research found that asking prices of high-end residential projects in District 2 increased from an average of $1,490 per square meter in 2012 to $1,650 at the present, up 11 percent, compared to 3 percent citywide.
It said the city’s poor infrastructure and lack of efficient public transport has been discouraging foreign investors from paying serious attention on places more than half an hour drive from the city center.
But the first metro line will change that by cutting travel time by at least half.
“Anywhere with decent access to this line will really benefit,” it said.