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Urbanization and determinants of land price of new urban districts in Ho Chi Minh City

By Nguyen Tien Huy (VNP 15)

Supervisor: Dr. Le Khuong Ninh

Abstract

Urbanization in Viet Nam, especially in Ho Chi Minh city, is one of the most decisive factors to boost the national development and economic growth. In parallel with the  such a rapid urbanization process, living standards of Vietnamese people have gradually been increasing. This urbanization is attributed to the capital flow to invest in property land, migration from other places to the biggest city in the country and the needs of  modern infrastructure in peri-urban areas around Ho Chi Minh city. As the result, rural areas around city have been urbanized to become new urban districts of Ho Chi Minh city. Recent decades have witnessed peri-urban areas of Ho Chi Minh city heavily affected by urbanization with upgraded  infrastructure, for instance Ha Noi superhighway, National way No.1, Tran Nao Boulevard, or newly-built streets such as large East-west highway, Le Thi Rieng street etc to tackle the traffic problems. The rebuilding of traditional markets like Thu Duc agricultural produce wholesales market; of new supermarkets and shopping malls like Coop-mart, Cho Lon electronic supermarket Lotte mart; of bank offices such as Asia bank, Sacombank, Navibank, Phuong Dong bank, etc. of new accommodation like Thu Thiem villa, Nam Long residence, Back Khoa residence; have made people's daily life become convenient. In other aspects of social and educational sectors, new universities like Sai Gon international university, Royal Melbourne Institute of Technology (RMIT)); new schools like British school, ACG school; new recreation centers (Suoi Tien cultural park; enrich  knowledge and spiritual life of both local residents and immigrants. In addition, new industrial zones such as Linh Trung export processing zone, Binh Chieu industrial zone, Tan Thoi Hiep industrial zone, Tan Binh industrial zone, Cat Lai industrial zone, have created many jobs with higher income (compared with traditional income from agricultural production) for people living in new urban districts. More ports are open (VICT port, Phuoc Long ICD port,. Cat Lai port, the extended New Sai Gon port,.....). The needs of lots of land for all these construction works in new urban districts have caused the price of land to skyrocket. Meanwhile, immigrants from all parts of the country rushed into new urban districts to earn their livings and to build new accommodation which made land price rise higher.

Thus, it can be seen that  urbanization and land prices in new urban districts of Ho Chi Minh city are correlated. For this reason, this paper applied theories regarding to determinants affecting to land price in other countries combined with cross-section data collected and interviewed directly in 5 new urban districts in Ho Chi Minh city, Vietnam to show the impacts of urbanization to land prices in new urban districts of Ho Chi Minh city. The author used gravity theory and hedonic pricing theory for  the description and applied gravity model developed by Yue Jin Shi, Timothy T Phipps and Dale Colyer (1997) to run regression. Final results will exert the influences of urbanization over prices of land in new urban districts of Ho Chi Minh city, Vietnam through nonfarm determinants.

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