Huge demand from real needs
According to Savills, during the period 2019-2023, real estate prices in Hanoi increased by an average of 6%/year and in Ho Chi Minh City by 3%/year, while personal income increased by only 4% and 3% respectively. This widening gap makes home ownership more difficult than ever for many people. In addition, legal barriers, problems of developers and delays in issuing housing support policies have made the situation more complicated.
A sustainable real estate market often has a diverse range of segments, especially class B and C products. However, in both Hanoi and Ho Chi Minh City, the supply of these types of housing is in serious shortage. The demand for about 50,000 apartments per year, mainly from middle-income people and young households, has not been fully met.
Activities of the apartment segment in Ho Chi Minh City (Photo: Savills)
According to Ms. Giang Huynh, Director of Research and S22M at Savills, both Ho Chi Minh City and neighboring provinces such as Binh Duong, Dong Nai, and Long An are facing a shortage of housing supply. In the near future, Ho Chi Minh City will witness an increase in high-end projects, while the supply of affordable housing is limited.
In contrast, Hanoi will focus on developing Class B projects. This imbalance is due to many factors, including income growth, limited land fund and high land costs, along with complicated administrative procedures in licensing new development projects.
With public investment in infrastructure accounting for about 6% of GDP, the Government is implementing many large projects such as building roads, bridges, airports and seaports. At the same time, Ms. Giang said the revised Land Law has created more favorable conditions for implementing these projects.
The main objective of these projects is to improve transport connectivity between provinces and cities, shortening geographical distances and travel times, especially between urban centres and suburban areas. This will facilitate socio-economic development and attract investment.
"The transit-oriented development (TOD) model, typically the metro system, has proven to be effective in solving traffic and housing supply problems. By focusing on developing areas around metro lines, construction density increases, facilitating travel and connectivity between areas. At the same time, exploiting land funds along metro lines also helps reduce investment costs, thereby creating more affordable housing options for people," the Savills expert added.
TOD model is a support for affordable housing development
Expert Giang Huynh said that to reduce pressure on land funds and urban costs, Hanoi and Ho Chi Minh City are aiming to expand urban areas to neighboring provinces such as Binh Duong and Bac Ninh. Heavy investment in transport infrastructure has facilitated this process, making suburban areas more attractive to investors and residents.
Policy push
Savills experts also believe that the promulgation of new laws such as the Land Law 2024, the Real Estate Business Law 2023 and the Housing Law 2023 is expected to create positive changes in the real estate market. These new legal regulations promise to improve land use efficiency, simplify administrative procedures and create more favorable conditions for investors to participate in the market.
"In particular, the Housing Law 2023 has simplified the process of buying and selling houses, and at the same time provided clear regulations on foreign home ownership. Accordingly, foreigners can own up to 30% of the total number of apartments in a building and no more than 250 houses in a ward. The ownership period is 50 years and can be extended. However, in the case of marriage to a Vietnamese citizen, foreigners are allowed to own houses permanently," Ms. Giang cited.
To address the housing shortage and prevent land speculation, the 2023 Real Estate Business Law has introduced a ban on land subdivision in major cities from January 31, 2025. At the same time, the 2023 Housing Law also has important adjustments, focusing on housing development in major cities.
In addition, the mandatory regulation of reserving 20% of land area for commercial projects has been abolished, opening up opportunities for investors to convert this area to build social housing. Social housing investors will enjoy many attractive incentives such as free land use, no land rent and the opportunity to access loans with preferential interest rates.
Social housing is also fertile land for investors.
Savills also stated that to solve the problem of affordable housing, we need a comprehensive solution, combining the strengths of both the public and private sectors. No single party can solve this difficult problem.
In the context of limited state budgets and high interest rates, financing social housing projects is facing many difficulties. At the same time, the private sector is also facing inflationary pressure on input costs. Therefore, effective cooperation between the two sides is urgent.
Global targets for carbon emissions reduction also add urgency to the issue. Affordable housing providers can help achieve these targets by renovating existing properties or converting unsuitable properties, such as vacant offices or shopping centres, with the support of favourable planning and regulations. In addition, increased density and efficient planning will play a key role in providing affordable housing.
The city government should have strong incentives for landowners to work together to create new sustainable residential areas. By making the most of land, combining it with shared facilities and green spaces, we can partly solve the increasingly urgent housing problem. Close coordination between the government and investors will be the key to making these ideas a reality.
Source: https://www.congluan.vn/can-ho-vua-tui-tien-la-phan-khuc-tiem-nang-cho-don-cac-chu-dau-tu-post314660.html
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