VCB Tower is a high-rise building project in Ho Chi Minh City, Vietnam consisting of office space and parking. It took several years to gain approval and was designed by Pelli Clarke Pelli Architects. The building is located in District 1 and has 171 meters of height with 35 floors. It is estimated to cost $96.5 million to construct and will provide office space for Vietcombank as well as rental office space. The project aims to meet the growing demand for high quality grade A office space in Ho Chi Minh City.

1. The Socialist Republic of Viet Nam
Independence – Freedom – Happiness
-----------------------------------------------------------------
Vietnamese – German University
TECHNICAL AND ECONOMIC FEASIBILITY OF
VIETCOMBANK (VCB) TOWER IN HO CHI MINH CITY, VIETNAM
FROM INVESTOR’S VIEW
Nguyen Thi Le Ha - UDP 2010
Real Estate and Urban Development
Prof. Dr. Karl Kluegel
July 2011

2. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
Content:
1. Introduction
2. Building overview
2.1. VCB Tower - Building Site
2.2. VCB Tower - Project 2005 to 2011
2.3. VCB Tower – Approval & Construction 2011-2013
3. Methodology of analysis:
3.1. VCB Tower - architecture design
3.2. VCB Tower on District 1 & general planning of HCMc
3.3. VCB Tower – economic aspect
4. Evaluation
5. References
Page 1

3. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
1. Introduction:
(1)
According to CBRE’s report, Marc Townsend judged that Asian should upgrade grade of office
to adapt the demand of global tenants (2) that means bringing more qualitative building contributed,
the more attractiveness Vietnam office market gets. CBRE also mentioned in this report that net
(3)
absorption coming from grades B and C in 2011 was higher than grade A . So a question
appeared in my mind that there should or should not exist Vietcombank Tower (VCB Tower)
which consists of forty percent area for VCB bank office and sixty percent area for Grade A for-
rent office in 2013.
On the other hand, it took seven years since 2003 proposing VCB Tower project to 2010 approving
(4)
the project, and there were five options within five completely different perspectives to VBB
choose, so another question appeared that what criteria being best to VBB choose the option
designed by (5) Pelli Clarke Pelli Architects to construct.
These questions above reached me to pick VCB Tower amongst thirty three developments in
district 1 for assignment researching technical and economic feasibility of offices in Ho Chi Minh
city, Vietnam. But because of the limited information I got, this paper may not show a full
conclusion or prediction for every criteria evaluating VCB Tower project.
Keywords: Marc Townsend, Pelli Clarke Pelli architects, VBB, Vietcombank Tower options,
Vietnam Real estate, Demand of Office for Rent, Fiscal Policies, City Planning, land value, long
term perspective, Site Area, Coverage, Construction Area, G.F.A – Gross Floor Area (within and
without basement), F.A.R – Floor Area Ratio, Share Area (Open Space, Technical Floor, Parking),
Podium, Retail.
__________________________________________
(1) CRBE: CB Richard Ellis http://www.cbrevietnam.com/loadpage.php?page=homepage
(2) 4th April 2011, Vietnam Real Estate Update and Market Overview (Indigestion in the property Market –
Again) – Page 13: Global office demand mirroring VN – flight to quality with tenants taking advantage of high
quality affordable space. 62% of global future supply will be in Asia (total of over 5 million sqm)
(3) 4th April 2011, Vietnam Real Estate Update and Market Overview (Indigestion in the property Market –
Again) – Page 15: 2011 take-up will not exceed the record 227,000 sqm in 2010. Net absorption may equal the
absorption in 2010 but most absorption will come from Grades B and C.
(4) VBB: Vietcombank - Bonday - Ben Thanh Tourist Joint-venture Co., Ltd http://www.vbb.com.vn/
(5) Pelli Clarke Pelli Architects http://www.pcparch.com/#/projects/new-work/vietcombank-tower-/
Page 2

4. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
2. Building overview:
2.1. VCB Tower – Building site:
VCB Tower is located on no. 5, Me Linh square, Dist. 1, HCM city, at the corner of streets Ton Duc
Thang, Hai Ba Trung (20m), Mac Thi Buoi (20m) and Phan Van Dat (20m) that is named gold land of
HCMc.
According to document no. 6804/UB-DA issued on 9th November 2004 by City People’s Committee,
land area is 3232 m2. According to document no. 3753/QHKT-KT issued on 16th December 2004,
criteria consist of: Function: high-rise building for office & commercial; Height: 35 floors & 3
basements; Coefficient of land use < 16;
Coverage ~ 67%; Step back > 4m
__________________________________________
Figure 1,2,3 edited myself with photoshop. Source:http://maps.google.com/, google search/image
Page 3

5. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
2.2. VCB Tower – Project 2003 to 2010:
Preparation and Legalization: 16th December 2003, HCMc. Department of Planning & Investment
(DPI) proposed to city People’s Committee a project which would be invested by Vietcombank,
Bonday Investment and Ben Thanh Tourist. 9th November 2004 City People’s Committee dispatch
document no. 6804/UB-DA requiring establishing Vietcombank (52%) – Bonday (30%) – Ben Thanh
Tourist (18%) Jointventure Co., Ltd. (VBB). 16th August 2005 HCMc. DPI provided to VBB their
land-use right certification T00349/2a. According to document no. 1033/VP-ĐT issued by City
People’s Committee, HCMc. Department of Architecture & Planning (DPA) took a response directing
VBB to enforce the project. 18th May 2006 HCMc. DPA proposed to City People’s Committee a scope
of work and all criteria to be approved by document no. 2881/VP-ĐT.
Competition and Stagnation: 19th March 2007 VBB proposed a revision for building cost from $55
million to $65-70 million and building height from 35 to 39 floors, G.F.A (Gross Floor Area) from
74,400 m2 to 76,000 m2. At the same time, VBB organized a competition and chose several options in
(6)
which they decided to choose the option designed by DP Consulting Co., Ltd. as the first prize
proposing to DPA.
____________________________________
(6) DP Consulting Co., Ltd. http://www.dpconsulting-arch.com/
Figure 4,5,6: three of four options chosen by VBB. Source http://www.skyscrapercity.com/showthread.php?t=418979
Page 4

6. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
Since then, VBB and DP Consulting could not push the project up because of difficult in finding sub-
contractors, so they stopped their co-operation.
_________________________________
Figure 7,8,9: DP Consulting won the competition. Source http://www.skyscrapercity.com/showthread.php?t=418979
Page 5

7. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
2.3. VCB Tower – Approval & Construction 2011-2013:
Another Participated: With a deep experience in designing land mark building Pelli Clarke Pelli
Architects from America (PCPA) was selected as another potential partner to design VCB Tower.
Many buildings on the world were built by PCPA such as World Financial Center in New York,
Petronas Towers in Kuala Lumpur, International Finance Centre in Hong Kong. And others financial
institutions including Citigroup (London), BankBoston (Buenos Aires), Wachovia (Winston-Salem,
N.C.), Bank of America (Charlotte, N.C.), Lehman Brothers (London), and Wells Fargo (Minneapolis,
Minn.) has designed by PCLA.
Approval & Construction 2011-2013:
According to document no. 4680/UBND-ĐTMT issued on 22th September 2010 by City People’s
Committee and 2348/SQHKT-QHKTT issued on 27th August 2010, VCB Tower was approved to get
171 meter height (206 meter to the top of lightning), corresponding to 35 floors (the roof could be 27
meter higher than the old one by DP Consulting). They approved for 67% of land can be constructed,
total floor area is 77.000 m2 and coefficient land use (F.A.R – floor area ratio) is less than 20. More
requirements are 244 lots for car parking, 100 lots for motor parking and more than 4 meter step back.
The estimate cost for contributing this 3.230 m2 site area would be approximate $96.5 million ($69
million for construction). The main function of VCB Tower is that 40% for VCB office - HCM branch
(7)
and 60% for office rental-type A. At the current time, PCPA has chosen BSV Bachy Soletanche
(8)
Vietnam as sub-contractor constructing VCB Tower’s basement, Euro Window as sub-contractor
finishing the façade of the building.
According to BSV, 16th April 2010 was the date BSV signing the contract with VBB as the main
contractor for basement construction packet which would be done in seventeen months. October 2010
was the date VCB tower project on construction stage.
_________________________________
(7) BSV Bachy Soletanche Vietnam: http://www.bachy-soletanche.vn/english/News.htm
(8) Euro Window: http://eurowindow.biz/en/Home/default.aspx
Page 6

8. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
_________________________________
Figure 10, 11: PCPA’s option - overview. Source http://www.pcparch.com/#/projects/new-work/vietcombank-tower-/
Figure 12, 13: VCB construction site. Source http://www.skyscrapercity.com/showthread.php?t=418979
Page 7

9. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
3. Methodology of analysis & evaluation:
Firstly all information in this paper is collected by July 2011, so any further revision or development
for VCB tower could be changed up to date based on it. Secondly my methodology used to evaluate
five norms which consist of strong, satisfactory, function, aesthetic and economic will be followed the
formulation:
No. Article Foundation Source Compare to Result Follow
A Architecture Drawing ATA Architects Permission Meet fully (Y)/ Table
& Planning Argument Architecture Forum Voted (%) not satisfy (N) 1, 2, 4
B Economic & Drawing Lecture by Professor Drawing to Meet fully (Y)/ Table
Real Estate Research CBRE & others research not satisfy (N) 3, 5
3.1. VCB Tower - architecture design:
Vietnam and America standards permitted by People’s Committee are two sets of architectural and
technical criteria used to design the building. Other mechanic and electrical standards are followed
America, England and Canada as well.
For evaluating technical feasibility, all parameters showed on table 1 will express clearly how much
success the project could get. These parameters designed by PCPA are performed in drawing set
developed by ATA Architects that is attached below.
According to drawings, 4 meter set back from Mac Thi Buoi and Hai Ba Trung streets and 6 meter set
back from Phan Van Dat street and Melinh square are good enough as the permission asked.
Also based on drawings, a simple calculation contributed to find out total area for parking area is that
{sum area of basement 2 to 4 (3 floors)} minus {total area of stairs, elevators, corridor, and
technique rooms such as pump, septic, waste water, etc.}. So on the real area for cars, motors and
bicycle can approximately equal to 70 percent of the total area for parking area has just found because
there must be 30 percent of total area for two lanes moving vehicle and turning corners.
Page 8

10. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
The most important reason explaining why number of elevators mentioned in table 1 is the ability to
escape from the building that could answer for how smooth transportation and moving flow are.
Real area used by office is calculated in table 1 as well as parking area in order to evaluate how
effective of floor using per cost unit then.
Table 1: Designed parameters for VCB tower project and simplified calculator
Planning Data
Site Area 3230.00
Construction Area 2019.75
Coverage 62.53%
Open space 1210.25
Basement area per floor 3230.00
Total basement area 12920.00
Typical floor area - level 1 to 7 1996.82
Typical floor area - level 8 to 28 1489.78
Typical floor area - level 29 to 35 1330.70
Total office floor area include share area 54578.02
Total G.F.A - With Basement, open and garden area 68708.27
TOTAL Total G.F.A - With Basement, without open and garden area 67498.02
Number of elevator 13
Share area (Stair, elevator, lobby & corridor,technical rooms, etc.) 450.00
Technical room (portable water on 3rd basement) 122
Office area exclude share area - level 1 to 7 1546.82
Office area exclude share area - level 8 to 28 1039.78
Office area exclude share area - level 29 to 35 880.70
Total office area exclude share area 3467.30
Total parking area & share for vehicle 8218.00
Shared area for vehicle (=30% of total parking area) 2465.40
Area for parking 5752.60
F.A.R 20.00
_________________________________
Table 1: All parameters showed are my calculation by converting image file (ATA architects drawings) into autocad file and
using several architectural skills to get basic numbers. So these numbers can be approximate error a little bit.
Page 9

11. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
_________________________________
Figure 14, 15, 16, 17: source ATA Architects profile. Graphic editing by myself
Page 10

12. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
3.2. VCB Tower on District 1 & general planning of HCMc
Evaluating this term seems to be difficult in case of a project being constructed, so I collected arguments
from many prestigious architecture forums to see how people said about VCB tower. And the result is on
table 2 right below. More detail for environmental benefit from this building, VCB tower’s water reuse
system would be provided.
Table 2: Collection of VCB tower project through architectural forums
No. Criteria Ranking
Good Bad
1 Facade Design 1 2 3 4 5
2 General planning of District 1, HCMc. 1 2 3 4 5
3 Environmental benefit 1 2 3 4 5
3.3. VCB Tower – economic aspect
During a long process since 1997 designing to 2010 constructing, VCB tower have had many options to
choose so that the construction cost also changed from $55 million to $70 million then 96.5 million within
52% funding from VCB, 30% from Bonday and 18% from Ben Thanh Tourist.
Table 3: Estimation of VCB tower project by VBB (Vietcombank – Bonday – Ben Thanh)
No. Article Unit Prediction
1 Construction Cost $US 96.5 mil
2 Price per square meter for-rent $US 45-55
3 Time finished Date Year 2013
4. Evaluation
According to table 1 of part 3.1, a short mathematical contribution should be done as like as table 2 below.
As the last column on table 2 saying “Yes”, Vietcombank Tower must be feasible at the technical side.
_________________________________
Table 3: these numbers are taken from several Vietnam and International magazines and newspaper
Page 11

13. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
However the last point cannot be skipped in table 1 is “F.A.R = 20” - very high ratio which was not
permitted before by People’s Committee that means adding more floor into the building is not only more
benefit for investor but also high density for Melinh Square. So on this area would be changed for the long
term perspective of district 1 and HCM city.
Table 4: Compare between permitted and designed parameters for VCB tower project.
Function: 40% area belongs to VCB headquarter, 60% last is grade A office for-rent
No. Article Unit Permitted Drawing Deviation Yes/No/Na
1 Site Area m2 3,230 3,230
2 Coverage % 67 62.53 4.47 Y
3 Total floor area m2 77,000 67,498.02 9,501.98 Y
4 Number of car parking Car 224
More than
5 Car parking area per 1 lot m2 12.5 2 times
permitted Y
6 Number of motor parking Motor 100 Higher
amount
7 Motor parking area per 1 lot m2 1.44
8 Total parking area m2 2944 5752.60 2808.60 Y
9 F.A.R < 16 20 -4 N
10 Set back m >4 4 to 6 Y
Total height m 171 Na
Table 5:
No. Article Unit
1 Office area for-rent (grade A) m2 3467.30
2 Construction cost $US 96,500,000
3 Expected rental price per m2 (lowest, highest) $US 45 55
5 Gross rental revenue at 100% occupancy $US 1872342.00 2288418.00
7 5% Vacancy Rate (to Q2/2011) $US 93617.10 114420.90
8 35% Operating cost $US 655319.70 800946.30
9 Net operating income $US 1123405.20 1373050.80
10 Break even ROR $US 0.60 0.60
Page 12

14. Nguyen Thi Le Ha - Technical and Economic Feasibility of Vietcombank Tower in Ho Chi Minh city.
By the way calculated on table 5, after 70 years (formulation = year = 96.5 mil / net operating income)
VBB could get back their funding for this project. But there are another struggle formulation to find out
VCB tower’s IRR and NPV to evaluate economic feasibility. However they need a higher level of
information which I could not reach, so a clear conclusion for VCB economic feasibility is impossible in
this case.
Another word for VCB Tower is that it would be a huge effect to social and planning of HCM city in the
near future.
5. References
All CBRE reports
VGU project feasibility report done by World Bank
Document by People committee (Issues showed above in this paper)
Knight_Frank_HCMC_Property_Market_Q1_2011_EN-8April
HCMC Office - Property Market Brief - 1Q11 (EN) – offices by Jones Lang La Salle
Website of architecture company related to this project
Page 13