HO CHI MINH CITY NEEDS TO REDUCE URBAN COSTS TO MAINTAIN ITS COMPETITIVE EDGE

High housing prices, traffic congestion and expensive logistics are gradually eroding Ho Chi Minh City’s agglomeration advantages, highlighting the need to reduce the urban cost burden to maintain the city’s competitiveness, experts say.

Assoc. Prof. Dr. Tran Dinh Thien, former Director of the Vietnam Institute of Economics, said that alongside opportunities created by the expansion of its development space, Ho Chi Minh City is also facing significant internal challenges, particularly rising urban costs. He made the remarks at the 2026 Real Estate Forum, themed “Mega City, Mega Opportunities,” organized by TheLEADER on August 25.

In particular, high logistics costs and housing expenses are directly affecting the city’s competitiveness. Thien cited a house-price-to-household-income ratio of around 30 times in Ho Chi Minh City, compared with what he said was typically around four to five times in developed countries.

When housing costs become excessively high, workers find it increasingly difficult to access the city, as a large share of their income must be allocated to housing. This leaves less room for spending on education, services and other necessities. For businesses, the challenge is reflected in their ability to attract and retain workers.

Looking at urban costs from the perspective of planning and infrastructure, Nguyen Do Dung, CEO of international consulting firm enCity, said Ho Chi Minh City’s challenges are not limited to traffic congestion, flooding and pollution. A deeper issue is the growing logistics burden borne by both residents and businesses.

According to Dung, traffic congestion causes an estimated US$6 billion in losses each year, increasing travel time and transportation costs while reducing business efficiency. Meanwhile, an urban agglomeration can only fully capitalize on its advantages when residents and businesses can access jobs, housing and services at reasonable costs.

“Planning is one part of the equation, but infrastructure is what truly drives urban development,” Dung said.

Over the past two decades, Ho Chi Minh City’s urbanization has not developed entirely in line with earlier planning orientations. The 1993 and 1998 master plans envisioned stronger development toward the south and east. However, northern and northeastern areas have urbanized more rapidly, supported by better infrastructure connectivity.

The Hanoi Highway is one example. The major transport corridor connects the city center with Bien Hoa and was subsequently extended toward Binh Duong, contributing to the emergence of new development centers. Areas with well-developed transportation and industrial infrastructure have quickly attracted residents and economic activity.

Dung said infrastructure should not only be designed to ease congestion but also to expand the labor market and improve access to housing. Ho Chi Minh City aims to develop approximately 200 kilometers of urban railway by 2030. If the network is implemented in an integrated manner, workers will have more options when choosing where to live, while businesses will gain access to a broader labor pool.

However, transportation infrastructure can only address part of the problem if suitable housing is unavailable. Social housing and affordable housing need to be developed alongside new transport corridors. If residents can travel farther but cannot afford to buy or rent homes in well-connected areas, the housing burden will simply shift from the city center to the outskirts.

Regarding logistics, Dung noted that the concentration of production areas in the north and seaports and airports in the south and southeast forces a significant volume of goods to pass through the urban core.

Completing Ring Road 3 and Ring Road 4, together with north-south and east-west transport corridors, could create additional connections between production centers, seaports and airports, reducing the need for freight to travel through the city center.

From a real estate perspective, infrastructure can redistribute land values, with greater concentration expected around metro stations, transport hubs and corridors such as Ring Road 3, where transit-oriented development (TOD) can be promoted.

However, experts emphasize that infrastructure should not be developed merely to increase land prices. Its broader objective should be to improve productivity and strengthen the competitiveness of the entire urban economy.

According to Assoc. Prof. Dr. Tran Dinh Thien, the “mega opportunities” arising from the formation of a megacity must be accompanied by the “mega capabilities” needed to turn those opportunities into reality.

The city therefore needs not only new planning frameworks and policy mechanisms but also solutions to bottlenecks involving infrastructure, capital, businesses and implementation capacity.

When residents can access jobs, housing and services at reasonable costs, while businesses can reduce transportation expenses and reach a broader pool of workers, Ho Chi Minh City’s agglomeration advantages can be fully realized.

At that point, infrastructure will not merely create additional value for real estate. More importantly, it will become a foundation for improving productivity and strengthening the competitiveness of the entire city.