Social housing investors' profits rarely reach 10%

In reality, investors only make a profit of 5-7% when developing social housing. To create more motivation for businesses, the Ministry of Construction proposed raising the maximum profit margin to 13%.

In reality, investors only make a profit of 5-7% when developing social housing. To create more motivation for businesses, the Ministry of Construction proposed raising the maximum profit margin to 13%.

Sharing with reporters of Investment Electronic Newspaper - Baodautu.vn , the media representative of BIC Vietnam Company said that the Housing Law 2023 stipulates that the maximum profit for social housing investors is 10%. However, in most projects, businesses find it difficult to achieve the above rate.

In reality, the profit this unit earns is only about 7%. This profit is only enough for the business to operate its machinery. However, the company still persists in developing low-cost housing to demonstrate social responsibility, build reputation, and from there sell other commercial products.

Currently, investors are only allowed to enjoy a maximum profit of 10% when building social housing. Photo: Thanh Vu

Previously, answering the Investment Electronic Newspaper , Mr. Tran Duc Vinh, Chairman of the Board of Directors of Tran Anh Group, said that in Long An province, social housing apartments with an area of ​​40 m2, with a mezzanine, are sold for about 15 million VND/m2. However, the construction cost has reached 10 million VND/m2, not to mention the loan capital, land price...

"For each square meter, we calculate the profit to be only 1 million VND, or about 5%," Mr. Tran Duc Vinh confided.

In a similar situation, Mr. Le Huu Nghia, Director of Le Thanh Real Estate Company, said that the maximum profit of 10% is too low. Meanwhile, the total time to implement a project, from licensing to construction investment, lasts about 7 years.

“It is estimated that each year investors only have about 1.3 - 1.5% profit, not enough for reinvestment,” commented Mr. Le Huu Nghia.

Faced with the above situation, the Ministry of Construction is seeking opinions on a draft Resolution on piloting a number of specific mechanisms and policies for social housing development for the Government to consider and submit to the National Assembly for approval. The draft stipulates many preferential mechanisms, making it more open to investors in social housing projects.

Notably, the Ministry of Construction has proposed to increase the profit margin for social housing investors from 10% to a maximum of 13% of the total project construction cost. Investors will base this profit margin on the price list for selling, leasing and renting social housing.

The new profit rate will apply to all social housing projects and housing for the armed forces, built on public land and 20% land fund of commercial housing projects. In addition, this policy also applies to completed social housing projects but the State management agency has not yet approved the selling, rental and hire-purchase prices.

According to current regulations, investors in social housing projects are limited to a maximum profit of 10%. However, many businesses and experts believe that this profit level is not attractive enough.

Previously, the Ho Chi Minh City Real Estate Association proposed that the Government consider increasing the profit margin for social housing project investors to 15%. The Hanoi Department of Construction also proposed increasing this profit margin to 15-20%.

According to the Ministry of Construction, the country aims to develop 130,000 social housing units by 2024. However, to date, only 21,000 units have been completed, equivalent to more than 16% of the plan. To accelerate the progress, support policies from the State play a particularly important role. This becomes even more meaningful when the Prime Minister has assigned social housing completion targets to each locality.

Specifically, in the period 2025 - 2030, localities will complete 995,445 apartments. Of which, in 2025, there will be 100,275 apartments; in 2026, there will be 116,347 apartments; in 2027, there will be 148,343 apartments; in 2028, there will be 172,402 apartments; in 2029, there will be 186,917 apartments; and in 2030, there will be 271,161 apartments.

Source: https://baodautu.vn/batdongsan/loi-nhuan-chu-dau-tu-nha-o-xa-hoi-hiem-khi-dat-du-10-d257113.html