Kim Oanh Real Estate hopes to solve difficulties for social housing

Speaking at the seminar "Identifying the real estate market at the end of 2024 and the beginning of 2025" recently organized by Nguoi Lao Dong newspaper, Ms. Dang Thi Kim Oanh, Chairwoman of the Board of Directors of Kim Oanh Real Estate Group Joint Stock Company, emphasized the difficulties that the real estate market is facing, especially in the social housing sector.

Overview of the discussion "Identifying the real estate market at the end of 2024 and the beginning of 2025" by Nguoi Lao Dong Newspaper

The demand for housing is huge.

Ms. Oanh said that Kim Oanh Group has been developing in the real estate industry for more than 16 years. In the past, the company has been successful with many large projects in Binh Duong, Dong Nai, Ho Chi Minh City and Ba Ria Vung Tau. When the Government announced the Project to build 1 million social housing units, Kim Oanh Group realized that the State is making many policy changes in creating a healthy and sustainable real estate market.

"At the same time, we also believe that the market will have positive changes from August 1, 2024, when three new laws officially take effect. And to prepare for these changes, Kim Oanh Group has proactively planned to develop large-scale projects, not only focusing on standard urban areas but also aiming at social housing projects, serving low-income people and households without housing" - Ms. Oanh said.

According to the Chairman of Kim Oanh Group, currently, the demand for social housing in localities with strong industrial development such as Binh Duong, Dong Nai and Ba Ria - Vung Tau is very high. These provinces attract hundreds of thousands of migrant workers to work, but the current supply of social housing is not enough to meet the demand.

Ms. Dang Thi Kim Oanh, Chairwoman of the Board of Directors of Kim Oanh Real Estate Group Joint Stock Company, spoke at the seminar.

In that context, the group has made efforts to find effective solutions, learning from social housing models in developed countries. In particular, Ms. Oanh expressed her impression of the success of the social housing model in Singapore - where 90% of the population lives in social housing areas built with high standards, modernity, convenience and greenness.

"Our desire is to create social housing projects that meet Singapore standards for Vietnamese families," Ms. Oanh shared her determination and said that the Group has signed a strategic cooperation agreement with Surbana Jurong Group - a big name in the field of social housing development in Singapore and globally. With this cooperation, Kim Oanh Group is expected to bring to the Vietnamese real estate market top-quality social housing projects.

According to the plan, Kim Oanh Group will develop 26 social housing projects with a total of 40,000 apartments. The total land area for social housing is 107 hectares. In November, Kim Oanh Group will launch the first social housing project in Binh Duong New City, with a scale of 26.69 hectares.

This project not only meets high technical and quality standards but also promises to make a strong impression on the market thanks to its EDGE green certification, while integrating hundreds of modern amenities to serve residents. In particular, the selling price of social housing apartments in this project is only about 50% compared to projects in the same segment on the market.

Land fund difficulties

However, Ms. Kim Oanh frankly pointed out the difficulties that businesses investing in social housing are facing. First of all, land fund is a major obstacle. According to regulations, social housing projects must set aside 20% of land fund to build social housing. However, the allocation of this land fund to businesses or localities still has many shortcomings.

Ms. Oanh believes that the project should be handed over to businesses, with the assurance that the businesses will be held responsible if they do not complete it on time. "If businesses do not do it right, they must be held responsible, and then the house price will be more reasonable, bringing benefits to customers," she said.

Another issue is the land price for social housing projects. Ms. Oanh suggested that there should be clarity and transparency in land valuation between land funds allocated by the State and land funds purchased by enterprises themselves. Citing the social housing project of Kim Oanh Group in Binh Duong, although the enterprise purchased it 8 years ago, the investment cost and profit are now about 1,000 billion VND.

Ms. Oanh raised many problems and difficulties in implementing social housing at the seminar.

The origin of this land is industrial park land approved to be separated into a residential area and has been approved 1/500. If calculated based on the industrial park land price of 170 USD/m2, the value is also more than 1,000 billion VND. However, if applying the current price of land for commercial housing, the figure could be up to more than 3,000 billion VND, causing difficulties for the development of social housing projects.

Therefore, she proposed that the State should clearly distinguish between types of land allocated by the State or purchased by enterprises themselves to determine clear and reasonable prices. This also prevents enterprises from making mistakes in the investment process, and also encourages enterprises to accompany the State in developing social housing.

Another problem that businesses face is legal procedures. Ms. Oanh shared that although there are separate regulations for social housing, in reality, administrative procedures have not been shortened, leading to a longer project completion time. This affects the investment efficiency of businesses. She proposed that there should be procedural reforms to reduce the burden on businesses and speed up the progress of social housing construction.

In addition, the issue of profit margin is also a major barrier for businesses. According to regulations, businesses are only entitled to a maximum profit of 10%, while sales costs account for 6%, making the actual profit only 6%. This makes it difficult to attract large businesses to invest in this field. Ms. Oanh called on the Government to have clearer incentive policies to motivate businesses to participate in developing social housing.

Regarding the exchange of land funds for social housing construction, although the new law stipulates that investors are allowed to propose exchanges, they must have land funds in the same type of urban area or the same company.

In reality, this is very difficult to meet because not all investors have many land funds in the same type of urban area. For example, currently, many businesses want to swap old projects after adjustment but cannot do so because the two land funds are not in the same city and not in the same company even though they are both under the same group.

Capital constraints

In addition, borrowing capital to implement social housing projects also faces many difficulties. According to Ms. Oanh, businesses can only borrow preferential loans of about 15% of the total project investment capital from the Development Investment Fund of provinces and cities.

This is not enough to cover costs, while loans from commercial banks, despite preferential interest rates, are still at 8.2% to 9% per year - much higher than the interest rates that businesses can accept when developing social housing.

Not only businesses are facing difficulties, but people are also facing many obstacles when buying social housing. Ms. Oanh gave an example of the interest rate for loans to buy social housing, which before August 1, 2024 was 4.8%/year from the Social Policy Bank, but after August 1, it increased to 6.6%/year - almost equal to the commercial loan rate. This makes workers, who already have low incomes, not dare to borrow money to buy houses.

"Many home buyers, despite meeting the income requirements, still cannot borrow money because the approval process is too complicated, especially the requirement to prove income in the last 3 months," Ms. Oanh said.

In addition, the procedure for proving borrowers' income is still complicated, causing difficulties for many people with real needs. "Many customers of Kim Oanh Group have paid 20-30% of the house value in advance but still cannot receive the house because the bank does not disburse the loan in time," Ms. Oanh added.

Not to mention, the regulations on income when buying social housing also have many shortcomings. Specifically, if a single person needs an income of 15 million VND, and a couple needs an income of 30 million VND, even if the difference is only 1 million, such as 29 million or 31 million, it will not be considered. This causes many people to lose the opportunity to buy a house, while they have to mortgage the apartment and be responsible for paying the principal and interest to the bank.

Ms. Oanh also raised the issue that currently most of the enterprises doing social housing are not for profit. Therefore, some units have the mindset of building low-end houses, cheap prices, so the quality is not up to standard, the apartment buildings are only 5 floors high and do not have elevators, the apartments only have a few types of small areas, lack of amenities and lack of security and safety... Therefore, the houses quickly deteriorate, the repair costs are high and the residential areas are very shabby.

Meanwhile, Singapore builds apartments with many different areas, from 1 bedroom to 4 bedrooms for many generations to live in. This is suitable and they also build very high quality so that the apartments can be used for a long time, passed down to many generations to live in without having to buy another house. In addition, although it is social housing, it still has many modern amenities to serve the needs of the people.

Kim Oanh Group has surveyed and recognized this as a good way and is determined to learn from experience, develop Singapore-quality social housing for Vietnamese people. "We believe that if the State can remove the above difficulties for businesses as well as offer suitable preferential loan interest rates and simplify the application review for social housing buyers, the completion of the Government's project to build 1 million social housing units will be a resounding success. And our workers will have more conditions to stabilize their lives in spacious, clean, and fully-equipped houses to work with peace of mind and contribute to economic development" - Ms. Oanh believes.

Source: https://nld.com.vn/dia-oc-kim-oanh-mong-go-kho-cho-nha-o-xa-hoi-196241012102904491.htm