HO CHI MINH CITY (Reuters) - A new city has risen out of a swamp south of the winding Saigon River, part of a real estate boom that is reshaping lifestyles in developing Vietnam and enriching some speculators.
The smooth roads, condominiums, apartments, offices, convenience stores and restaurants of Phu My Hung (Saigon South) are a far cry from congested, squalid streets and housing in much of Vietnam's largest city of about 8 million people.
Saigon South was chosen by the Communist Party government as a model for new towns across the Southeast Asian country, whose emerging market economy is growing at more than 8 percent a year, prime time for property developers and investors.
"The schools, the shopping, security and everything are very convenient and very different from where I grew up," said Le Uy Linh, 32, who bought a villa in Phu My Hung three years ago.
She was born and raised in District 5 of the city, which most people still call Saigon.
Linh is director of an investment firm and other companies. She and her husband, a doctor, have two children. They are typical of the young professionals the "new towns" want to attract.
Plans called for the streets to be a certain width, for a certain mix of greenery and a mix of tenants, Vietnamese and foreigners who work in the city.
In the style of South Korea, Taiwan, Singapore or the Philippines, plans for a plethora of "new towns" outside of crowded cities are replete with spacious housing and schools, businesses, golf courses, movie theatres and concert halls.
Several such developments have been built in and around Ho Chi Minh City in the south, the capital Hanoi in the north and the central city of Danang.
Set on large tracts of land, they epitomize a higher standard of living that a new Vietnamese urban middle class aspires to, and that was unimaginable for earlier generations who endured hardship in the Soviet-style command economy.
The government began gradual economic reforms in 1986, but it was not until the last five years or so that market-oriented capitalism became more conspicuous. A year ago, Vietnam joined the biggest free trade club, the World Trade Organization.
Since last summer, local small investors have been turning away from the fledgling stock markets to buy real estate, lining up in their thousands to deposit cash for condos and apartments that have not yet been built.
They included The Vista high-end complex of Singapore's CapitaLand, Southeast Asia's largest property developer. In February, the group announced plans to expand in Vietnam. Speculation is rife and some economists and businessmen see a property market bubble.
The Vista was fully booked at prices that rose to $2,700 per sq meter from $1,350 per square meter in just weeks.
"Vietnam is still a poor country yet some of these prices are more like New York, Tokyo or Singapore," said one financial services executive who asked not to be identified. "It's not just about lack of supply."
Prices for some city luxury apartments tripled in 2007 and speculation is rife. Office rents in Ho Chi Minh City shot up in the past year by 40 percent and will cost about $70 per sq m in 2008 as foreign companies expand, commercial realtors said.
Marc Townsend, managing director in Vietnam of CB Richard Ellis, the global commercial real estate services firm argued that "it all comes down to lack of supply...I would say more of the same for at least another two years until we begin to see some of the bigger buildings coming onto the market."
Real estate experts forecast growth of between 20 and 30 percent this year.
The government is still trying to develop a structure countrywide for taxes and regulations, said Tran Du Lich, chief economist of the Institute for Economic Research, a think-tank for Ho Chi Minh City's economy.
"Prices have gone beyond real values because of land speculation," Lich said.
Gesturing to a large wallmap in his office, he described some of the ambitious plans of the city's fathers to transform its landscape in the next 15 years with new roads, bridges and commercial and residential property.
On February 21, the city broke ground for the first underground metro station, a 19.7 km route linking the city centre with northeastern outskirts by 2014.
At Saigon South, another foreign developer, Central Trading and Development Group of Taiwan put faith in growth, which has averaged an annual expansion of 7.5 percent since 2000.
"We were literally under the water in 1998 with our first development, a piece of swamp right next to ours," Arthur Ting, the 35-year-old CT&D chairman said in his office in a building named after his late father, Lawrence Ting.
"My father told me, 'we are going to Vietnam to see what we can leave behind'," he said.
CT&D Group invested in an export processing zone, a power plant and commercial and residential real estate in Saigon South. The masterplan of Ho Chi Minh City and developers is for 3,300 hectares for one million people and a central business district for the headquarters of some of Vietnam's top new companies.
Additional reporting by Nguyen Nhat Lam; editing by Megan Goldin