Why apartments are getting more and more expensive; Social housing investors rarely make a profit of 10%

In 2025, affordable apartments will increase in price more than luxury apartments; Hanoi is about to open for sale nearly 14,000 houses, most of which are expensive; Hanoi requests the police to handle the situation of "bribes" to buy social housing.

Why apartments are getting more and more expensive; Social housing investors rarely make a profit of 10%

In 2025, affordable apartments will increase in price more than luxury apartments; Hanoi is about to open for sale nearly 14,000 houses, most of which are expensive; Hanoi requests the police to handle the situation of "bribes" to buy social housing.

Here are the real estate highlights of the week.

Each square meter of apartment bears dozens of costs.

Reporters of the Investment Electronic Newspaper - Baodautu.vn surveyed the market and contacted many businesses, they all said that the price increase was not "imposed" by the investor, but was based on investment costs. Specifically, for apartment projects, to make up the price of each square meter sold to customers, there will be no less than 10 types of costs.

Rising land and construction costs, combined with the time it takes to get permits, have caused apartment prices to skyrocket.

The first is the money to buy land. To be able to set up a real estate project, the investor must have a land fund, and the land price is currently quite high. For example, in Binh Duong, an area bordering Ho Chi Minh City, a land fund of more than 5,000 m2 that can be used for a real estate project will cost from 200 to 300 billion VND. The amount of money to buy this land, the enterprise only uses 30% of its own capital, the rest will be borrowed from the bank, the interest rate is usually 10%/year.

Second, if there is land fund, but if the land has not been cleared, compensation for site clearance will have to be carried out, this cost usually accounts for 30% of the investment cost.

Third, after having land fund, the enterprise will carry out legal procedures for the project, the cost of applying for legal documents for the project is from 10% to 15% of the total investment capital of the project.

Fourth is land use tax. This fee is applied according to the land price list issued by the province or city based on the current land price list.

Fifth is the project construction cost. Currently, the price of cement, bricks, steel, sanitary equipment, and furniture is increasing. For high-end projects, it will be at 20 - 30 million VND/m2, for mid-range projects, it will be at 15 - 20 million VND/m2. Usually, the project construction cost will be borrowed by the investor from the bank to make the initial investment. If the project is 20 floors high, has more than 700 products, and 1 basement, the construction cost will be about 1,000 billion VND, the common loan interest rate is 10%, and the construction time will be 28 months. Thus, there will be nearly 300 billion VND in loan interest for construction, this interest will be included in the house price when sold to customers.

Sixth is marketing and sales costs. This cost is about 10% of the project investment capital and is also added to the selling price to customers.

Seventh is the commission fee for brokers. With the current apartment segment, the commission fee for brokers is 6 - 7%/product sold. This fee is also added to the selling price of the house.

The eighth is the cost of sales, discounts such as giving gold, giving cars to customers. This cost is about 1% of the product value.

The ninth is corporate income tax, which is 20%.

The tenth is the cost of profit of the enterprise at each project. The profit will be calculated by the enterprise at the lowest of about 20%.

Finally, there are project management costs and corporate staff salaries.

Not to mention, if the project's legal procedures are slow, lasting 4-5 years, the annual bank interest rate that the business has to pay for the loan will be applied directly to the house price.

In 2025, affordable apartments will increase in price more than luxury apartments

Recently, Vietnam Report Joint Stock Company has announced the ranking of 10 prestigious real estate companies in 2025. Notably, the comments on real estate prices in the coming time are highlighted. Through the survey, most businesses believe that prices will continue to increase in 2025.

Real estate price fluctuations by segment.

Specifically, the segments of housing, luxury apartments, offices for rent, industrial real estate, and land will increase slightly in price by less than 10%.

Meanwhile, the low-cost to mid-range housing and apartment segment will have a larger increase, from 20 - 30%. As for the resort real estate segment, businesses believe that prices will not fluctuate much. This is also the type with the slowest recovery rate after the difficult period.

Notably, Vietnam Report assessed that the real estate market is experiencing many fluctuations due to the information about local mergers. Currently, many investors are hunting for land funds in areas expected to become administrative centers. This has caused land prices to increase sharply, in some places up to 20% even though there has been no official announcement.

Hanoi is about to open for sale nearly 14,000 houses, most of which are expensive

The Hanoi Department of Construction has just updated the list of future housing projects eligible for sale in the area. Accordingly, 11 new housing projects have been approved, adding 13,995 units to the market supply.

A new apartment project opened for sale in Ha Dong district. Photo: Thanh Vu

Of these, apartments continue to dominate with 8,798 units in 5 projects. The low-rise segment has 6 projects, providing 5,197 units.

Most of the apartment projects are located in the two urban areas of Ocean Park and Smart City. Of which, the investor Masterise Homes has the largest number of apartments for sale with 2,461 units. These are high-rise products from buildings Z34, U38 and U38A on lot B6-CT01 (Ocean Park 1).

In addition, another project at Ocean Park will also open for sale more than 2,000 apartments in the near future. That is the apartment complex U26A, T26M, Z30 on land lot B4-CT01, invested by CapitaLand.

In the low-rise housing segment, the two largest projects are both located in the western part of Hanoi. The New Life Urban Area - Sunshine Grand Capital was approved to open for sale about 2,300 units. This project spans the areas of Tan Lap, Tan Hoi (Dan Phuong district) and Duc Thuong, Duc Giang (Hoai Duc district).

Also in Dan Phuong district, Vingroup’s Green City urban area has been allowed to open for sale 2,279 units. The project has a scale of 133.4 hectares, located in 4 communes of Tan Hoi, Tan Lap, Lien Ha and Lien Trung (Dan Phuong district). This project was just launched on March 10.

By 2025, housing supply in Hanoi will no longer be scarce. However, another difficult problem has emerged. That is the imbalance between supply and demand, when the high-end segment almost dominates the entire market. Meanwhile, the affordable housing segment is in serious shortage.

Social housing investors' profits rarely reach 10%

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.

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

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.

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, leasing and hire-purchase prices.

Hanoi asks police to handle the situation of "bribes" to buy social housing

Recently, the Hanoi Department of Construction has requested the city police to strengthen the direction of the commune-level police (where there are social housing projects) to review and handle brokers who take advantage of receiving declarations and submitting purchase/lease/hire-purchase documents in violation of the law. Any fraudulent acts when declaring and confirming social housing documents when discovered, including during the post-inspection process, will be handled according to current regulations.

The Department of Construction also requested the Department of Natural Resources and Environment to direct the Land Registration Office to facilitate people to declare documents confirming housing conditions. At the same time, the People's Committee at the commune level also needs to support people in confirming conditions on housing, income, and preferential loans.

Right in front of the social housing project N01 Ha Dinh (Thanh Tri district), a real estate company brazenly opened a document processing service. Photo: Thanh Vu

Note that people can only submit their applications directly to the investor, not through brokers or real estate trading floors. Before selling/leasing/renting to buy social housing, the investor is responsible for reporting to the Department to publicly post information on the electronic information page of this unit about the time to receive applications and the selling price.

Previously, according to the investigation of the Investment Electronic Newspaper reporter - Baodautu.vn , some trading floors and brokers continuously advertised new social housing purchase quotas with a difference of 200 million VND to 1 billion VND compared to the original price.

On social networks, many self-proclaimed real estate experts are also selling “sure-win” social housing purchases. These individuals openly assert that they have relationships with businesses, which is why they have such advantages.

Even the consulting service for making documents, which is normally provided free of charge by investors, is being exploited by organizations and individuals who charge fees of 5-10 million VND/set. Some units even openly hang signs accepting documents right in front of the gate of social housing projects.

Ministry of Construction requests clarification on people standing in the rain, demanding handover of social housing

Deputy Minister of Construction Nguyen Van Sinh has just sent a document to the Hanoi People's Committee, requesting to check information related to people standing in the rain, asking investors to hand over social housing.

At the time of its launch, social housing in Dai Mo urban area had prices almost equal to those of commercial apartments in the area. Photo: Dung Minh

Previously, on February 25, dozens of customers who bought apartments at HH4 building of the Dai Mo urban functional area project (Dai Mo ward, Nam Tu Liem district, Hanoi) gathered at the FLC Landmark Tower building on Le Duc Tho street. Many people hung banners in the rain to request the investor, Alaska Real Estate Investment Joint Stock Company, a subsidiary of FLC Group, to hand over the houses as promised.

Customers said they signed a contract to buy the apartment in 2020, with the expected handover date in the second quarter of 2022. However, the investor did not fulfill its commitment and delayed the handover date 3 times. Some customers even paid the full value of the apartment, including the 2% maintenance fee as prescribed, but still have not received the house.

Pursuant to Clause 15, Article 75 of Decree No. 100/2024 of the Government detailing a number of articles of the Housing Law on the development and management of social housing, the Ministry of Construction requests the Hanoi People's Committee to direct competent agencies to inspect and clarify the above reflection and report the results to the Ministry before March 30, 2025.

In the latest notice sent to customers on February 25, the investor plans to complete the grid connection before March 15; from March 15 to April 15, it will conduct a technical system test and fire prevention inspection; and invite competent authorities to inspect before April 25. However, many residents have expressed concerns about the legitimacy of this notice, as the representative's signature does not come with a specific title.

HH4 social housing building is 29 floors high, including 173 social apartments for sale, 57 apartments for rent and 58 commercial apartments. Apartment area ranges from 48 - 70m2.

The time to receive home purchase applications starts from April 2021. The time to hand over the house is committed by the investor to be the second quarter of 2022. The selling price as approved by the Hanoi Department of Construction is more than 16.8 million VND (including 5% VAT, excluding 2% maintenance fee).

Quang Ngai dismantles 450 billion VND social housing project

HUD - Phu My Social Housing Project is a high-rise residential plot within the Phu My Urban Area project, Quang Ngai city. The project is invested by Housing and Urban Development Corporation (HUD).

The project will invest in building 2 new 9-storey towers, with about 384 apartments on a total area of ​​15,567 m2, total floor area of ​​36,700 m2, meeting the needs of about 1,000 people. The total investment capital is about 450 billion VND, the project implementation period is from 2025 to 2028.

Perspective image of HUD - Phu My Social Housing Project.

According to the investor representative, up to this point, out of the total of nearly 16,000 m2 of land (applied to build a social housing project), there are about 2,955 m2 of land clearance compensation that has not been completed.

For the remaining area (without problems), the investor is implementing essential technical infrastructure, expected to be completed in 2025.

Regarding implementation progress, HUD Corporation has hired a consulting organization to prepare a feasibility study report, basic design and completed documents, and is organizing technical review.

It is expected that in 2025, the investment project approval and construction drawing design will be completed; from 2026 - 2027, the investment implementation of phase 1 of the project with a scale of 192 apartments in block B will be completed; by 2028, phase 2 will be completed, with a scale of 192 apartments in block A.

Completed 4 planning projects for old apartment buildings in Dong Da district in March

On March 20, the Office of the Hanoi People's Committee issued Notice No. 139/TB-VP on the conclusion of Vice Chairman of the Hanoi People's Committee Duong Duc Tuan at the working session on 4 detailed planning projects for the renovation and reconstruction of the old apartment buildings of Kim Lien, Trung Tu, Khuong Thuong, Hao Nam, Dong Da District, Hanoi.

Accordingly, after listening to the report of the Dong Da District People's Committee, the planning consultant and the opinions of the delegates attending the meeting, Vice Chairman of the Hanoi People's Committee Duong Duc Tuan agreed to conclude and direct as follows:

Regarding progress, Dong Da District People's Committee closely coordinates with Hanoi City Departments and branches to simultaneously implement procedures for collecting opinions from the community, reporting to the Hanoi City Urban Planning and Construction Planning Appraisal Council and relevant agencies, completing the above 4 detailed planning projects in March 2025, submitting them to the Department of Planning and Architecture for appraisal in April 2025, and submitting them to Hanoi City People's Committee for consideration and approval in May 2025.

Regarding the method of calculating the necessary housing floor fund to rearrange planning projects: The housing floor area in planning projects is determined on the principle of conformity with the Housing Development Program, Decision No. 34/2024/QD-UBND dated May 27, 2024 of the Hanoi People's Committee.

Source: https://baodautu.vn/batdongsan/ly-do-chung-cu-ngay-cang-dat-do-chu-dau-tu-nha-o-xa-hoi-hiem-khi-lai-du-10-d257458.html