Case | HBS Case Collection | February 2013 (Revised February 2014)

Phu My Hung

by John Macomber and Dawn H. Lau

Abstract

Privately held city development promoters decide whether to partner on next phase or go it alone in a 20-year, 4000-acre project. Set outside of Ho Chi Minh City, Vietnam, this decades-long project led by two Taiwanese families reshaped and built the economic environment of Vietnam's financial capital. The promoters had a long-term vision and left very substantial capital invested for a very long time. This allowed them to follow a master plan that was resource efficient, economically attractive, and environmentally friendly (largely due to major up-front investments in power and water infrastructure). This project was promoted by industrialists with a system view and patient capital, as compared to governments with limited execution capability or real estate investors with limited capital and a shorter time horizon. The dilemma in the case is about whether or not to partner with an outside retail real estate firm in order to reduce execution and lease-up risk in a proposed new shopping mall; or whether to go it alone with the promoters's own capital doing it the promoter's own way. This expands into a discussion of the same historic choices in the project, and whether the promoters realized a below market return for their methodology. The project is quite successful and transformational today, so the opposite question can also be drawn out: is this the preferred means for promoting multiple new sustainable and competitive cities around the world, with long-view private promoters in lieu of government alone and in lieu of real estate developers alone?

Keywords: Urban Development; Infrastructure; Real Estate Industry; Viet Nam;

Citation:

Macomber, John, and Dawn H. Lau. "Phu My Hung." Harvard Business School Case 213-098, February 2013. (Revised February 2014.)