According to the Master Plan for Hai Phong City’s development for the period of 2021-2030, which was approved by the Prime Minister in December 2023, Thuy Nguyen district is set to become a new city under Hai Phong’s administration by 2025. By then, Thuy Nguyen is expected to attain the status of a class-III urban area, with aspirations to further develop into a class-II urban center and become Hai Phong’s multi-sector economic hub by 2035.
To realize this ambitious vision, several notable projects have been initiated in Thuy Nguyen, including a new administrative and political center spanning an area of 324 hectares, the Thuy Nguyen Industrial Park covering 319 hectares, the Hai Phong Ring Road, and the extended Duong Do Muoi Road. The Hai Phong People’s Committee plans to mobilize 285.4 trillion VND in capital to continue Thuy Nguyen’s development through to 2045.
Image of Thuy Nguyen District, Hai Phong City.
Vietcap believes that Thuy Nguyen is poised to lead Hai Phong’s real estate market. According to VARS, land prices in Thuy Nguyen surged by 50-100% in 2021 when plans to establish Thuy Nguyen city were announced, followed by a 15-30% decline during 2022-2023.
Following the official approval of the master plan to upgrade Thuy Nguyen to a city in December 2023, the district witnessed a moderate increase in land prices of 5-10% on average, yet it continued to lead Hai Phong’s real estate market in terms of transaction volume. VARS suggests that Thuy Nguyen’s real estate market still has room for growth in the medium term, supported by the area’s developing infrastructure and social amenities.
One of the significant beneficiaries of Thuy Nguyen’s burgeoning real estate market is Hoang Huy Financial Services Investment Joint Stock Company (TCH). TCH is currently developing three residential real estate projects in Thuy Nguyen, namely the Duong Do Muoi Urban Area, Hoang Huy New City, and Hoang Huy Green River.
These projects mark a significant transition for TCH, evolving from a developer of small and medium-sized projects under 5 hectares to undertaking larger-scale developments of up to 49.6 hectares. Aside from Hoang Huy New City, which has already been constructed, the remaining land bank is scheduled for development between 2024 and 2028, as per the company’s management plan. Vietcap anticipates that the transformation of Thuy Nguyen into a new city will likely facilitate the absorption of TCH’s upcoming projects.
Moreover, TCH acquired the land banks for two of its projects, Hoang Huy New City and Hoang Huy Green River, at favorable costs through build-transfer (BT) contracts with the Hai Phong People’s Committee. The company expects these projects to maintain attractive gross profit margins of over 40%, consistent with their previous BT contract-based projects.
Historically, TCH has secured multiple projects through BT contracts. In essence, BT projects involve an investor implementing an infrastructure project on behalf of the government and receiving payment in the form of money, land, or other agreed-upon methods. The principle of equivalence is maintained, ensuring a predetermined profit margin for the investor, typically ranging from 10-12%. Decree 69/2019 stipulates that the value of a BT project should be equivalent to the value of the public asset used for payment, determined through a competitive bidding process.
According to Vietcap’s analysis, TCH currently holds a total of seven projects acquired through BT contracts, including completed, ongoing, and upcoming projects. In the past, numerous securities companies have asserted that acquiring projects through BT contracts would yield significant benefits for TCH, amounting to trillions of VND.
However, not all of TCH’s projects are obtained through BT contracts. For instance, the Duong Do Muoi project in Thuy Nguyen was acquired through a public auction. This project is also known by its commercial name, Hoang Huy New City – II, and it is located in Tan Duong commune, Thuy Nguyen district, along the extended Duong Do Muoi Road.
Spanning an area of 49.6 hectares, the project offers villas, shophouses, and apartments. TCH acquired this project in December 2023 through an auction with the Hai Phong People’s Committee. The company plans to invest 15,000 billion VND in the development of the Duong Do Muoi Urban Area, making it TCH’s largest-scale project to date. TCH intends to finalize the project’s legal procedures and commence construction in July 2024.
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