Le Thanh Company last August held a groundbreaking ceremony to start the Le Thanh Tan Kien Social Housing development in Binh Chanh district in HCM City. Expected to be completed after two years, it will provide 1,445 social housing apartments under long-term lease. The apartments have an area of 45-50 sq m.

Le Thanh’s CEO Le Huy Nghia said the company had to spend five years to fulfill legal procedures for the development of the project. This is the first social housing project in HCM City to kick off this year.

Under the plan on developing at least 1 million social housing apartments for low-income earners and Industrial Zone workers in 2021-2030 initiated by the government, HCM City has been assigned to develop 69,750 apartments, including 26,250 apartments in the 2021-2025 period.

HCM City has committed to complete six social housing projects with 4,300 apartments in 2025 alone. According to the Ministry of Construction (MOC), from 2021 to August 2024, only four projects with 1,200 apartments were completed.

According to Huynh Thanh Khiet, deputy director of the HCM City Construction Department, Resolution 98 gives HCM City special regimes to settle existing problems, especially to remove legal obstacles and to develop social housing. However, Khiet pointed out that the difficulties in accessing official home credit remains a burning issue which hinders the development of social housing projects.

Regarding the VND120 trillion credit package with preferential interest rates for social housing development and residential quarter upgrading, six project developers in HCM City are eligible for accessing capital under the program, but none of them has received loans.

Foreign capital

While HCM City lacks housing products in general and social housing products in particular, Binh Duong has become a magnet that has attracted realtors over the last two years.

VietNamNet reporters have found that over 10 commercial (non-social housing) apartment projects in Binh Duong have or are going to be marketed, which will provide no less than 10,000 apartments.

Regarding the development of affordable housing products for low-income earners and factory workers, Binh Duong has been assigned by the government to build 86,877 apartments under the '1 million social housing product' program.

However, after realizing that the demand for this kind of housing is increasing rapidly, Binh Duong provincial People’s Committee has approved a plan on developing 160,325 social housing apartments in 2021-2030, nearly double the figure assigned to it.

In 2021-2025, the province plans to build 42,445 social housing units with total investment capital of VND24 trillion.

Foreign investors 

In addition to domestic investments, the low-cost housing market has recently attracted foreign investment. TT Capital Investment and two partners from Japan – Cosmos Initia, a subsidiary of Daiwa House Group, and Koterasu – have announced investment of $150 million in the Vietnamese low-cost housing market with disbursement within five years.

One of the projects to be developed by the investors is TT Avio in Di An City in Binh Duong. Providing 2,000 apartments at prices of VND2 billion each, the project is going to be marketed soon.

Prior to that, Kim Oanh Group announced cooperation with Surbana Jurong from Singapore to develop a series of real estate projects on housing, resorts and offices in southern provinces. The group is the developer of more than 80 percent of social housing in Singapore.

Under the cooperation agreement signed between the two parties, Surbana Jurong will help Kim Oanh Group implement social housing projects in accordance with ‘Singaporean standards’.

Kim Oanh Group’s CEO Dang Thi Kim Oanh said her business owns a land bank of more than 500 hectares in southern provinces. It plans to develop 25,000 low-rise and high-rise social housing products in Binh Duong and Dong Nai.

Local newspapers in late July reported that in a document to the Ministry of Commerce, Vingroup, a realtor, and Techcombank, a banker, proposed a new preferential credit package for social housing buyers. Those who join the program can enjoy a preferential interest rate of 4.5 percent, fixed for the first five years. The loan limit is 100 percent of the apartment value and the time limit is 30 years.

According to the chair of the HCM City Real Estate Association, the current preferential credit package cannot attract clients as they are not sure about the interest rates after the first five grace years.

To settle the housing shortage, according to Chau, in addition to supply improvement, there should be preferential credit packages with interest rates of 4.8-5 percent and loan maturity of a maximum of 25 years.

Anh Phuong