The Ho Chi Minh City People’s Committee has recently announced plans to auction 3,790 resettlement apartments in Thu Thiem. These apartments, located in the R1, R2, R3, R4, and R5 blocks of the new urban area of Thu Thiem, An Khanh Ward, are part of a larger program to provide 12,500 apartments for resettlement purposes.
It is worth noting that these apartments were completed as early as 2015. However, due to most of the affected residents opting for cash compensation instead of onsite resettlement, only a few blocks are currently occupied, with a small number having been converted into commercial housing from the outset, such as the New City project by Thuan Viet Company, comprising 1,229 apartments.
In 2017, the city first attempted to auction this project, offering it at a price of VND 8,800 billion for all 3,790 apartments, equivalent to VND 2.32 billion per apartment, but there were no bidders. Since then, multiple attempts have been made to auction the project, with the price gradually increasing from VND 8,800 billion to VND 9,100 billion and then to VND 9,900 billion, all without success.
The most recent attempt was made in 2023, with the price remaining unchanged from the previous auction at VND 9,900 billion, or approximately VND 2.6 billion per apartment, but it also failed to attract any bidders. It is anticipated that the fifth auction for these 3,790 resettlement apartments will take place in 2025.
What makes this project noteworthy is its prime location in the “golden land” of Thu Thiem. The area where the project is situated is highly desirable for real estate development and is considered an ideal settlement for millions of city dwellers.
As of now, the lowest price per square meter in this area starts at VND 150 million. Even projects in the surrounding areas have prices ranging from VND 100 million per square meter. This means that a two-bedroom apartment with an area of approximately 70 square meters would cost at least VND 7-10 billion, depending on the location, while the average price of the resettlement apartments being auctioned is only around VND 2.6 billion.
A real estate expert offered an explanation for the project’s relatively low pricing and lack of interest from buyers. Given that these apartments were constructed for resettlement purposes, the design is not aesthetically pleasing, the quality is not upscale, and the lack of amenities further diminishes their value compared to commercial apartment projects in the same area.
Additionally, according to regulations, businesses participating in the auction must make a deposit of 20% of the starting price. If a company wins the bid, they are required to pay 50% of the winning price within one month and the remaining 50% within 90 days.
The amount of nearly VND 10,000 billion is considerable, and arranging such a large sum of money within a short period, as stipulated, poses a significant challenge for businesses intending to bid.
Many components of the infrastructure are severely degraded. Source: Tien Phong
Moreover, as the project was constructed a decade ago and left unoccupied, many components of the infrastructure, including technical systems and fire protection, have deteriorated significantly.
As a result, a successful bidder would face the challenge of either demolishing and rebuilding the project or finding a way to repurpose the existing apartments for the market. If converted into commercial housing, the developer would have to pay additional land use fees, and the project would remain “on hold” during the transition, posing significant risks to the business.
Mr. Le Hoang Chau, Chairman of the Real Estate Association, suggested that to facilitate a successful auction, the project could be divided into smaller blocks. This approach would allow more businesses to participate, creating competition and increasing the chances of a successful auction.
Additionally, there is a proposal to convert this project into social housing. This option would not only clear the long-standing inventory but also fulfill the goal of constructing social housing and, more importantly, address the housing needs of low-income individuals.
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