REDUCING URBAN COSTS: A KEY FACTOR IN MAINTAINING HO CHI MINH CITY’S COMPETITIVENESS

Rising Housing Costs Are Affecting Urban Competitiveness

Assoc. Prof. Dr. Tran Dinh Thien, former Director of the Vietnam Institute of Economics, identified rising urban costs as one of the city’s major challenges.

According to him, housing and logistics costs are directly affecting Ho Chi Minh City’s ability to remain attractive to both workers and businesses. He cited a house-price-to-household-income ratio of around 30 times in Ho Chi Minh City, significantly higher than the roughly 4–5 times commonly seen in many developed countries.

When a large share of household income is spent on housing, workers have fewer financial resources available for education, services, and other essential needs. At the same time, high housing costs can make it more difficult for businesses to attract and retain employees in the urban area.

The issue therefore extends beyond the real estate market and is directly connected to the competitiveness of the urban economy.

Infrastructure Needs to Be Viewed Through the Lens of Cost Reduction

Nguyen Do Dung, General Director of international consulting firm enCity, said that issues such as traffic congestion, flooding, and pollution should be considered more broadly in relation to logistics costs.

According to him, traffic congestion is estimated to cause around US$6 billion in economic losses each year by increasing travel times and transportation costs while reducing business efficiency.

The agglomeration advantages of a major city can only be fully realized when people can access jobs, housing, and services conveniently and at reasonable costs. Similarly, businesses need efficient access to markets, labor, and supply chains without facing excessive operating expenses.

From this perspective, transport infrastructure is not simply a solution to congestion. It is also a foundation for reshaping the city’s development patterns.

Infrastructure Can Reshape the Urban Development Pattern

Urbanization trends over the past two decades show that Ho Chi Minh City’s actual development has not always followed the directions outlined in earlier master plans.

The 1993 and 1998 planning schemes emphasized expansion toward the south and east. However, northern and northeastern areas subsequently experienced rapid urbanization, partly due to their advantages in transport connectivity and infrastructure.

Ha Noi Highway is a notable example. The transport corridor connects the central area with Bien Hoa and has subsequently been extended to strengthen links with Binh Duong, contributing to the emergence of new development hubs.

This demonstrates how infrastructure investment can significantly influence the distribution of population, economic activity, and real estate demand across the wider metropolitan area.

Metro Development Must Go Hand in Hand with Affordable Housing

Ho Chi Minh City has set a target of developing approximately 200 kilometers of urban railway by 2030. If implemented as an integrated network, the metro system could expand access to employment opportunities, giving workers more choices in where they live while allowing businesses to reach a broader labor pool.

However, transport infrastructure can only address part of the challenge if suitable housing is not developed alongside it.

Social housing and affordable housing need to grow in parallel with new transport corridors. If residents can travel farther but still cannot afford to buy or rent homes in well-connected areas, the housing affordability problem will not be resolved. Instead, the burden may simply shift from central districts to the outskirts.

For this reason, transport planning and housing development need to be considered as part of the same urban development strategy.

Reorganizing Logistics Networks to Reduce Pressure on the Urban Core

Logistics costs are another issue that needs to be addressed as Ho Chi Minh City expands its economic footprint.

According to Nguyen Do Dung, the distribution of manufacturing areas in the north and the concentration of major ports and airports in the south and southeast means that a significant volume of goods currently has to move through the urban area.

The completion of Ring Roads 3 and 4, together with north–south and east–west transport corridors, is expected to create more direct connections between production areas, seaports, and airports. This could help distribute freight traffic more efficiently and reduce the need for goods to pass through the city center.

Infrastructure Should Not Be Measured Solely by Its Impact on Property Values

Infrastructure development often leads to changes in real estate values, particularly around metro stations, major transport hubs, and corridors with potential for transit-oriented development (TOD).

However, experts argue that increasing land values should not be regarded as the sole objective of infrastructure investment.

The greater value lies in its ability to generate new urban productivity: reducing travel times, expanding labor markets, lowering logistics costs, and improving people’s access to housing, employment, and essential services.

Assoc. Prof. Dr. Tran Dinh Thien noted that the opportunities created by the emergence of a mega city need to be matched by sufficient implementation capacity. In addition to planning and new policy mechanisms, Ho Chi Minh City needs to continue addressing bottlenecks related to infrastructure, financing, business capacity, and implementation.

In the long term, Ho Chi Minh City’s competitiveness will depend not only on the scale or speed of urban expansion. When the costs of accessing housing, jobs, services, and transportation can be kept at reasonable levels, the city’s agglomeration advantages can be transformed into higher productivity and more sustainable growth.

In this context, infrastructure can serve a role far beyond increasing real estate values. It can become a foundation for improving the efficiency of urban operations and strengthening the overall competitiveness of Ho Chi Minh City.