Social housing: A lifeline for real estate businesses

Recently, Prime Minister has approved the project "Investment in constructing at least 1 million social housing apartments for low-income earners, workers in industrial parks from 2021-2030".

Enterprises are getting involved

Mr. Truong Anh Tuan, Chairman of Hoang Quan Group, recently announced a plan to focus resources on providing 50,000 social housing apartments in many provinces and cities nationwide, providing homes for tens of thousands of households from 2022-2027. "Upcoming social housing projects are a long-term commitment to the low-income housing segment of the group," Tuan said.

He added that the company had prepared clean land funds to implement social housing construction over the next five years. Some projects have been implemented in the first phase, including the Mekong City New Urban Area and Phuc Long-Vinh Long social housing area, Tra Vinh New Urban Area, Golden City project in Tay Ninh, and South Phan Thiet - Binh Thuan New Urban Area.

Pham Thieu Hoa, Chairman of the Board of Directors of Vinhomes, said that the company aimed to invest in 500,000 social housing apartments in the next five years, focusing on areas near major cities such as Ho Chi Minh City, Hanoi, Hai Phong, and Quang Ninh. The scale of these projects will range from 50-60 hectares. These projects will be separate from commercial housing projects or social housing land plots in Vinhomes' major projects. The expected selling price of apartments here will range from VND 300-950 million per unit.

In addition to Vinhomes, Nguyen Anh Tuan, a member of the Board of Directors and General Director of Viglacera, said that the company had set a plan to prepare and implement new investments of about 2,000 hectares of industrial parks and 200 hectares of housing from 2022-2023.

Specifically, they plan to develop social housing and worker housing in sync with the development of existing industrial parks such as worker housing at Dong Van IV Industrial Park (Ha Nam), Phu Ha (Phu Tho), Dong Mai and Hai Yen (Quang Ninh), and Thuan Thanh, Yen Phong (Bac Ninh).

Businesses also partly redirect resources to invest in social housing to diversify their products, reduce risks when the real estate market faces credit control difficulties, excessively high house prices beyond affordability, supply-demand imbalances, and decreasing liquidity.

Expectations of      two bright spots

Previously, during the bottom of the prolonged real estate crisis in 2011, the affordable housing segment with good liquidity helped revive the frozen market thanks to the government's interest rate support package (VND 30,000 billion).

Therefore, increasing the supply of social and affordable commercial housing at this stage not only saves businesses but also can "thaw" the real estate market. Experts believe that when participating in this segment, developers have expectations of two bright spots in liquidity and credit (for both developers and buyers).

However, Mr. Le Huu Nghia, Director of Le Thanh Construction and Trading Co., Ltd., proposed that in order to have more businesses participating in social housing development, the legal procedures need to be faster, with a separate standard process for applying for project investment approval. The pricing appraisal process also needs to be simplified for businesses.

"Specific regulations on how many days from the date of application submission to when the legal procedures for the business to commence a social housing project will be processed. When issues arise, they must be reported back to the business within a certain time frame so that the business knows, rather than waiting indefinitely," said Mr. Nghia.

Banks are also involved by implementing a program to provide preferential loans for social housing with a scale of VND 120,000 billion. Specifically, from now until the end of June, developers can borrow at an interest rate of 8.7% per year, lasting for 3 years from the disbursement date. Meanwhile, home buyers are offered an interest rate of 8.2% per year for 5 years. After this period, the State Bank of Vietnam will announce the interest rate every 6 months.