The recent tropical storm “Usagi”, which hit Ho Chi Minh City and the southern part of the country at the end of November has caused homebuyers across the area to focus on flood control and reappraise what types of homes and area constitute good investments.
Almost all areas of Ho Chi Minh City suffered severe flooding with some of the heaviest flooding being in the Binh Thanh, Go Vap and Thu Duc districts as well as District 2, and District 7. According to the figures from HCMC government, the city has 66 places that are susceptible to flooding.
After tropical storm Usagi hit the city on November 25th, more than 100 routes were flooded with water levels ranging from 10 to 70 centimeters. Some locations, such as Nguyen Huu Canh street in Binh Thanh district, Quoc Huong street in District 2, Huynh Tan Phat street in District 7, and Le Van Viet street in District 9 were submerged under half a meter of water, and many automobiles and motorcycles stalled in the deep water and were stuck in the middle of the flood area.
According to Nguyen Huy Vu, general director of real estate distributor BVLand the flood has had an impact on homebuyers’ decisions and buyers are now considering flood risks before making a decision about buying a property.
Vu said that: “Flood risks are emerging as one of the most important factors to consider in a residential unit, perhaps even superseding location, price, and facilities. Ho Chi Minh City lies on a north-south slope, which means that districts 9, Go Vap, and 12 are less prone to flooding than more southern-lying areas of the city.”
Areas located next to canals and rivers also have to pay attention to the tides of the river system in and around the city, which have also flooded many areas and roads. In order to rectify the current situation, The Ho Chi Minh City People’s Committee has asked foreign investors to join 17 flood prevention and waste treatment projects in the city by 2020. Vice Chairman of the Ho Chi Minh City People’s Committee Tran Vinh Tuyen said that the city is seeking investment capital of more than $4.17 billion USD in order to implement these projects.
The city’s master plan on water drainage system approved by the prime minister in 2001 stipulates that the city needs 6,000 kilometers of sewers of all types. However, the current sewer system has only 4,000km of sewers.
Stephen Wyatt, Country Head of JLL Vietnam, said that floods heavily affect the real estate market in Vietnam, since they have a psychological impact on local and foreign homebuyers.
According to Wyatt: “While previously homebuyers would pay attention to factors like location, amenities, and fire-fighting system, they now lean towards properties that are located on higher grounds to minimize the risk and damage of flooding, not only within the property but also in the surrounding traffic area. This will also make developers consider investing heavily in drainage infrastructure system, and resolve problems related to flooding.”
Su Ngoc Khuong, Director of Investment at Savills Vietnam, discussed tropical storm Usagi and said: “The latest, rather serious flood in Ho Chi Minh City was a culmination of many reasons, with one of the most significant reasons being the fact that the development of the local infrastructure system has not kept up with the pace of urbanization and population increase. This causes a series of urban issues, such as traffic congestions, floods, traffic accidents, and environmental pollution.”
Khuong also said that local authorities must accelerate smart city development and need to synchronize urban operation databases and the city has an urgent need for a synchronized and complete zoning plan for Ho Chi Minh City. Khuong noted that: “Zoning always has a major impact on the infrastructure system and the real estate market. A well-developed real estate market can only be set up if it has perfect zoning”.
Real estate experts note that a number of projects in District 7 have been forced to reduce prices since their projects have been flooded multiple times, but that even with lower prices, sales remain slow and many units remain unsold.