Hanoi’s authorities are promoting credits for investors of social housing projects, houses for low-income groups, and old building renovation, to better meet public demands.

A social housing project in Dong Anh District. Photo: Hai Linh

Vice General Director of the Hanoi Investment Fund for Development Nguyen Thanh Hai said the city has released an investment portfolio subject to preferential loans from the Fund during the 2021-2025 period, with priorities given to housing projects for workers at industrial parks, economic zones; urban development, social housing, resettlement housing, and old building renovation.

“Total investment capital required for the housing development during the period is estimated at VND437 trillion (US$18.6 billion),” Hai told The Hanoi Times.

According to Hai, to realize the 2021-2025 housing development plan, the key task is to secure sufficient social capital, especially those for social housing and resettlement projects.

“Capital from the Fund, served as the ‘seed capital’, would make up 20-30% of the total investment fund, with the remaining coming from commercial banks via cooperation mechanisms,” Hai said.

To date, the Hanoi Investment Fund for Development has signed four memoranda of understanding to provide loans worth VND1.4 trillion ($60 million) to property developers.

Hai informed the fund also lent VND811 billion ($34.6 million) to four social housing projects.

Given the availability of around VND4.37 trillion ($187 million) for lending at a below-market interest rate of 5.96% per annum, Hai said the fund is expected to accelerate the disbursement rate and stands ready to accompany businesses in the city’s development process.

Statistics from the Ministry of Construction revealed demands for budget and social housing currently make up 70% of the total, but in fact, there has been a severe shortage of supplies in this market segment.

“Lack of interest from investors and complicated legal procedures are among issues that hinder the implementation of such projects,” noted the ministry.

Deputy Minister of Construction Nguyen Van Sinh pointed out the lack of land portfolio for social housing projects as one of the key reasons, along with complicated procedures in the investor selection process, or insufficient incentives to attract more businesses engaging in social housing projects.

During the 2010-2020 period, demand for housing for workers and low-budget income people was estimated at 12.5 million square meters of floor space, but in reality, only five million square meters have been built.

In the case of Hanoi, the demand for social housing during the 2016-2020 period was 5.5 million square meters of housing floors, but only 1.25 million square meters were completed.

The local authorities aim to have 6.8 million square meters of floor, or 113,000 apartments, worth VND12.5 trillion ($534 million).

“The city needs huge resources, including both state and social budget, to realize this goal,” Hai from the Hanoi Investment Fund for Development said.