The property market expects to see a wave of developers expand into affordable housing developments, which faced a severe shortage until the Government took steps to promote investment.

Investments in affordable homes are encouraged by Prime Minister Nguyen Xuan Phuc at a recent conference in Hanoi.

Heating the market, development giant Vingroup--previously known for its luxury real estate brands--introduced VinCity, a brand for affordable homes.

Le Khac Hiep, Deputy Chairman of Vingroup, said that VinCity was not social housing, but instead a development for  low and middle income earners.

VinCity apartments will be priced from just 700 million VND (31,250 USD) per unit, lower than the current market’s average price at 1 billion VND of similar apartments, but they will still offer adequate facilities such as schools, hospitals, shopping centres and parks with ensured quality and professional services.

In an announcement late last week, Vingroup said that around 200,000 – 300,000 Vincity affordable apartments would be developed in the next five years.

Vincity will first be built in seven provinces and cities, including Hanoi, Hung Yen, HCM City, Hai Phong, Thanh Hoa, Ha Tinh and Nha Trang. In Hanoi and HCM City, the gated urban areas will be developed in suburban districts to ease population density and traffic pressure in the downtown areas.

Hiep said that construction is expected to start early next year in all seven provinces and cities. Vincity will build in Gia Lam and Dan Phuong districts in Hanoi and District 7 and District 9 in HCM City.

Apartments will be between 35 sq.m and 90 sq.m with prices from 13 million VND to 19 million VND per sq.m.

Vingroup’s expansion into affordable housing has cheered the market, which had been warned of an imbalance between supply and demand since 2015.

According to Le Hoang Chau, President of HCM City Real Estate Association, this is good news for home-seekers, especially low-income earners.

Experts said that the giant developer’s capitalisation on affordable homes will cause other developers to reconsider their competition strategies and place greater focus on this segment, which will contribute to move the market’s supply and demand toward balance and benefit home buyers.

“Affordable homes are still of good liquidity, but the shortage remains severe,” Chau said, forecasting that affordable housing will continue to lead the market next year.

Besides VinGroup, several property developers--including Ecopark and Him Lam--are taking steps into the field.

Experts say expanding into this segment will be a smart move for property developers, as the Ministry of Construction forecast that 70 percent of market demand will be for affordable housing in 2017.

Nguyen Hoai An, CBREVietnam Director of Research, Consulting and Asset Management Services, said that competition in this segment will grow harsh, which should urge developers to focus on quality and infrastructure development.

An said that the reason why property developers are turning their eyes from luxury appartments to affordable homes is that the former’s sales are showing signs of slowing down while the market for the latter is getting thirstier.

Expert Le Ba Chi Nhan said that developing affordable homes of good quality and facilities requires land availability, which will be a major factor for developers.-VNA