In that context, affordable housing is a potential segment for investors today with high demand, accompanied by an increasingly complete infrastructure system and attractive investment support policies from the Government. On the other hand, close coordination between the public and private sectors is an important factor in solving the problem of affordable housing.
“Huge” demand for housing
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 with developers and delays in issuing housing support policies have complicated the situation.
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, is still not fully met.
According to Ms. Giang Huynh, Director of Research and S22M at Savills Vietnam, 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 Grade 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.
Series of infrastructure and policy support
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, the Land Law 2024 has created more favorable conditions for the implementation of these projects. The main objective of these projects is to improve traffic connectivity between provinces and cities, shortening geographical distances and travel times, especially between urban centers and suburban areas. This will create favorable conditions for socio-economic development and investment attraction.
“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,” Ms. Giang Huynh added.
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, while providing 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 Huynh 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.
At a recent workshop held in Ho Chi Minh City, Mr. Ha Quang Hung, Deputy Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) said that in recent times, localities have had many ways to attract businesses, real estate investors, and economic sectors to actively participate in the construction of social housing.
Specifically, statistics from 2021 to present show that in 61/63 localities, 619 social housing projects have been implemented, with a scale of 561,800 apartments. However, to date, only 79 projects have been completed with a scale of 40,600 apartments; the remaining 128 projects have started and are under construction, with a scale of about 112,000 apartments. In addition, the number of projects that have been approved for investment is 412 projects, with a scale of nearly 410,000 apartments, and are in the process of completing procedures to start construction.
In that context, according to experts from Savills Vietnam, to solve the problem of adequate housing and people's affordability, we need a comprehensive solution, combining the strengths of both the public and private sectors. No single party can solve this difficult problem. On the other hand, the state budget is limited and interest rates are high, financing social housing projects is difficult; the private sector is also facing inflationary pressure on input costs. Therefore, effective cooperation between the two sides is urgent.
Local governments 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 governments and investors will be the key to making these ideas a reality.
Source: https://doanhnghiepvn.vn/kinh-te/nhieu-co-hoi-cho-nha-dau-tu-vao-phan-khuc-gia-nha-phai-chang/20240930110450535
Comment (0)