Hanoi needs a favorable policy to attract investors into the development of social housing projects, along with preferential credit access and simplified investment procedures.
|Social housing areas at Dong Ngac Ward, Bac Tu Liem District. Photo: Pham Hung|
Vice Chairman of the Hanoi People’s Committee Duong Duc Tuan in a recent conference on the prospects of Vietnam’s real estate market noted the city is lacking low-price housing projects to meet the growing demand of the people.
In 2021, the city successfully called for investment into 69 housing projects with a total area of 4.3 million square meters, but in fact, only 1.3 million square meters were completed during the period.
On this issue, the Vice Director of the Hanoi Department of Construction Mac Dinh Minh said housing prices have been on the rise over the years. In 2021, the prices climbed by 4-5% year-on-year, in which commercial house prices started at VND25 million (US$1,067) per square meter, beyond affordability for low-income groups.
“The most challenging issue for Hanoi is the lack of land or the development of budget housing projects, especially social houses, mainly due to the low profitability,” Minh said.
Echoing Minh’s view, Vice Chairman of the Vietnam Real Estate Association Nguyen Manh Ha suggested greater incentives for investors, especially in financial and land allocation, are pulling factors to promote additional social housing projects.
“In this regard, an effective planning process would come into play,” Ha continued.
In the past 2016-2020 period, Hanoi built 34.8 million square meters of housing during the 2016-2020 period, surpassing the objective of 31.5 million square meters for the period.
The city expects to build another 44 million square meters of floors in the 2021-2025 period to meet the growing demand for housing from the locals, including 1.25 million square meters of social housing, 560,000 square meters of resettlement houses, 19.69 million square meters of commercial houses, and 22.5 million square meters of detached houses.
“This would take the average space per person to be 29.5 square meters,” Minh said.
To address urgent needs for more affordable housing projects, the Hanoi People’s Council on July 8 approved a housing development program for the 2021-2030 period, targeting the average floor area per person to reach 32 square meters per person; an addition of 5.5 million square meters of social housing floors; 15.19 million square meters of commercial houses; and 22.5 million square meters of detached houses.
This would require a total property portfolio of 1,868 hectares and investment capital of VND880 trillion (US$37.57 billion), of which VND11.7 trillion ($500 million) will be sourced from the state budget.
To ensure the realization of the program, the city plans to allocate 20% of the current property portfolio for social housing projects, along with providing preferential loans for investors.