Vietnam’s biggest city Saigon, according to real estate consultants, is one of the most dynamic in the world. The real estate focal meeting point for German business.
In order to make a good impression in Ho Chi Minh City, Horst Geicke presents himself generous. „The spiral staircase made by a specialist from Thuringia costs me 200.000 Euro in addition”, says the real estate investor from Hamburg during a site visit in the Vietnamese economic hub. Moreover, he loses 100 square meter of leasable space in the entrance area due to the stairs. „People already have declared me insane because of this“, says Geicke while going through his building shell wearing a safety helmet.
At a central location, Geicke is building a 25 storey office complex that is marketed under the name Deutsches Haus, as first focal meeting point for German businesses in the emerging market country.
The building is scheduled to open in August and sets new standards on the Vietnamese real estate market: Geicke is enthused about the energy-efficient double facade, LED lighting, a gym, and light-flooded ceilings. The fact that the investment into an economy which is growing by almost seven percent annually will pay off, is out of question for him.
The building project he started in 2014 comes at the right time: real estate professionals identify Ho Chi Minh City in this year as one of the most promising growth markets worldwide. The real estate company JLL has recently described the metropolis as most dynamic city in the world after Bangalore in India, measured by criteria such as economic growth and population dynamics. The real estate boom is driven by rapidly growing wealth in the communist country. According to JLL competitor Knight Frank, the amount of people with more than 30 million US-Dollar on the bank account does nowhere grow as fast as in the city that most people still call Saigon.
Skyscraper supposed to become Vietnam’s highest building
One of the super-rich is entrepreneur Pham Nhat Vuong, who like no other typifies the opportunities of Vietnam’s real estate market. The 48 year old who has studied in Moscow, earned his first millions with an instant noodle company in Ukraine, and invested the profits in hotels, residential buildings and shopping centres in Vietnam. Also the breakdown of the real estate sector following the financial crisis in 2008 did not dissuade him.
Apartments and houses for the emerging middle and upper classes made him the first Dollar billionaire of the country.
Five kilometres northeast of the historic city centre of Ho Chi Minh City, he is now creating a monument out of concrete steel and glass for himself. With 461 meters height, the skyscraper „Landmark 81” will be Vietnam’s highest building. The tower which is to be completed in 2018 will comprise penthouse apartments, a hotel as well as an observation deck and the largest shopping centre of the city.
The real estate agent Thinh Le believes the skyscraper will advance to the best address in town: „The Vietnamese love to own an apartment in a landmark.” Thinh Le markets the 40 hectare large area around the record-tower, a separate ward on the banks of Saigon River. 40,000 people are supposed to live here in the future in more than a dozen towers. 95 percent of the apartments are already sold, says agent Thinh Le. For particularly rich clients, a villa estate is being developed at the property with a total value of 1.5 billion dollars, with prices of around 2.5 million dollars per unit. “It is easy to sell”, comments Thinh Le. “The rich don’t know where to put their money, and invest it into real estate.”
The German Consulate will move rent-free into one floor
The high demand drives land prices up. The consulting company CBRE announced increases of up to 40 percent within one quarter for the popular District 2 in Ho Chi Minh City. The average square meter prices paid for new apartments have been increasing city-wide at an average of 13 percent within one year.
Meanwhile, the boom also benefits real estate firms from Singapore, Japan and Korea. The market is also opening for private persons: Since 2015 foreigners are allowed to lease apartments for more than 50 years with the option to extend the contract subsequently. However, afraid of not being able to transfer the capital out of the country after an apartment sale, they remain reserved.
Geicke had no reservations to invest around 100 million Dollar into his office tower with two German partners. He cooperates with the German Government which owns the land.
Is has been agreed that Geicke may use the office commercially for 30 years, before it is transferred to the German State. Apart from that, the German Consulate will move rent-free into one floor. Geicke is already thinking of his next project, a residential house. He wants to score with individual architecture, German building standards and a central water filter: „Drinkable tap water is luxury in Vietnam“.