My Dinh-Me Tri the next frontier

Keangnam Enterprise’s tri-towers will transform the area’s skyline

While developers are confident in the area’s rising status as a sub-centre market, some observers are concerned at a possible oversupply of office space and hotel accommodation when the buildings are opened for lease in five years.
CEO Investment is amongst the first developers to move into the area with the joint stock outfit constructing an office building 200 metres from the National Convention Centre which will provide 20,000 square metres for lease in two years.
“It is not easy to find a large site in the downtown area for construction of an office building and that is why many other developers are moving to My Dinh where the infrastructure is good and population is not overcrowded,” said Doan Van Binh, president and chief executive officer of CEO Investment.
“Currently, Hanoi is facing a shortage of office space and there are few major supplies to open in the downtown area in the next few years to meet rising demand as Vietnam is becoming a production hub in Asia,” he added.
Binh anticipated the CEO Tower would command a rental rate from $20-$23 per square metre, slightly higher than the average $17 level that Viglacera, a 17,000sqm office building opposite to the National Convention Centre, is currently leased for.
Next to the CEO Tower, Cavico Vietnam is building twin office towers, while Vimeco is working on an office building after selling all residential units in a block next to the Big C hypermarket.
While other local developers are working out a blueprint for offices, the biggest players will be foreign investors with plans to pour billions of dollars into commercial real estate.
The area will be transformed by the Landmark Tower, a $1 billion residential, hotel and office development by Korea’s Keangnam Enterprise that will boast one 70-storey and two 47-storey buildings with a total floor space of 578,000sqm.
Keangnam competed with Japan’s Riviera for a 4.3 hectare site behind the National Convention Centre. However, the Japanese company won Hanoi’s support and plans to inject $500 million to build apartments, offices and hotels.
My Dinh is luring a handful of hotel developers who have seen opportunities from the city’s dearth of rooms. Some eight hotel projects have been planned for My Dinh and Me Tri, including the 630-room Hanoi Plaza by Charmvit Group, Tran Hong Quan Trade Company’s 363-room Crowne Plaza and Bitexco’s 500-room Marriott.
Hanoi’s Department of Planning and Architecture recently announced another five-star hotel project to be included in the Phung Khoang new town, a 42ha mix-use development opposite to the National Convention Centre.
Alastair Orr-Ewing, executive chairman of Savills property consultant company, said many developments have been proposed in My Dinh, but although the area promised to be an important commercial centre, many of the important functions of the city, such as state ministries, the National Assembly, the State Bank, the stock exchange, embassies and NGOs would not move there.
“Therefore, for many businesses that collaborate with these organisations the current central business district will be more popular. Without relocating some of these key functions to My Dinh it maybe difficult to establish it as a new city centre instead of simply another commercial area,” he said.
“My Dinh area will be popular to businesses that do not need to be in the city centre and prefer a lower rent than a good location,” added Orr-Ewing.
However, the property consultant expressed concern over a possible glut of hotel accommodation and office space in My Dinh. “Hanoi certainly needs more hotels but the current centre will always be more popular for tourists and business people and I think that My Dinh will be second choice. This means that hotels in My Dinh may have lower room rates and occupancy,” he said.
“Many businesses will continue to want to locate in the current central business district. There are a large amount of offices planned in the My Dinh area, probably as much as 500,000sqm over the next five years, which is about double the current total in the whole of Hanoi. Certainly the economy of Hanoi is booming but there must be a question whether this much office space can be filled up,” he added.