HO CHI MINH CITY, VIETNAM—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 the 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% 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 old 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 theaters 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 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 about $250 a square foot from about $125 a square foot in just weeks.
"Vietnam is still a poor country, yet some of these prices are more like New York, Tokyo or Singapore," said a financial services executive who asked not to be identified. "It's not just about lack of supply."
Prices for some city luxury apartments tripled last year and speculation is rife. Office rents in Ho Chi Minh City shot up in the last year by 40% and will cost about $6.50 a square foot this year as foreign companies expand, commercial real estate agents said.
Marc Townsend, managing director in Vietnam of CB Richard Ellis, the global commercial real estate services firm, said that "it all comes down to lack of supply."