“HCMC continues to be an area of interest regarding development, ranking second behind Bangalore (India),” says the survey, which was made based on the opinions of internationally-renowned real estate professionals, including investors, developers, lenders, brokers and consultants.

Industry experts have a reason to place HCMC above Mumbai, New Delhi, Hong Kong, Singapore, Shanghai, Tokyo, Kuala Lumpur in terms of development prospects as this city is in dire need of property development to support the country’s growth.

The survey ranks HCMC as the best place for development prospects in Asia Pacific in the three development categories of office, retail and residential rental property, with respondents’ recommendations accounting for 49%, 51.1% and 36.6% respectively.

Recent months have seen retail giants from the United Kingdom and elsewhere come to explore opportunities as Vietnam will open up the market to foreign companies from 2009 under its commitment to the World Trade Organization.

HCMC still needs many more offices and residential rental apartments to quench the thirst of companies, particularly multinationals. Property managers pointed out the shortage of supply has pushed rentals higher than in regional cities including Bangkok.

The survey respondents also cast 47.8% of their votes for HCMC as the second best place in Asia Pacific for industrial/distribution property and 42.9% as the third place for hotel property when comparing the current stock with the growth potential of these industries.

HCMC had struggled with a serious lack of hotels, especially the luxury properties before the global tourism downturn months ago, and soaring room tariff was the result of this.

Despite a drop in the average room occupancy, a recent survey by the property services firm Savills Vietnam puts room tariff of 5-star hotels at nearly US$158 per day, 4-star hotels at more than US$100 and 3-star hotels at over US$63 in the third quarter of 2008.

According to the Hotel Department under the Vietnam National Administration of Tourism, the average room tariff in the country is still 10-15% higher than in some regional markets. Tourism officials said the country would need more hotel rooms to support tourism growth.

Therefore, many of the survey respondents named HCMC as one of the attractive places for development prospects not only in the hotel property but also in other fields of real estate.

“The survey results show that HCMC continues to be a market of immense interest to property developers and investors. The opportunities are evident to all,” said David Fitzgerald, who is HCMC-based tax partner and real estate industry expert of PricewaterhouseCoopers Vietnam.

“Development opportunities are going to continue to be key,” Fitzgerald said. He explained in a statement sent to the Daily that the report highlighted the interest from investors in buying properties in all sectors, but they were hindered by the limited supply of stock.

Fitzgerald said 2009 would be a challenging year with access to credit likely to be a key obstacle. However, he noted that developers that are able to take a long term view and have access to cash are likely to consider HCMC for new projects.

“Overall, the city seems to remain on radar for both investment and development capital,” according to the survey.