Apartments for less than $50,000? Not in HCMC

By Trung Tin   September 24, 2020 | 05:04 pm PT
Apartments for less than $50,000? Not in HCMC
An aerial view of buildings and houses in District 1, Ho Chi Minh City in September 2020. Photo by VnExpress/Quynh Tran.
Affordable apartments costing around VND1 billion ($43,000) are becoming a thing of the past in HCMC since construction costs have risen rapidly, industry insiders said.

Most small apartments of 45-50 square meters are being sold for VND1.5-1.7 billion, 50-70 percent higher than five years ago, data compiled by VnExpress shows.

This is a per-meter price of around VND34 million, compared to VND22 million in 2015. Some projects in the eastern, southern and western parts of the city are selling at VND30-40 million per square meter.

In District 9, which borders Dong Nai Province, many projects have the lowest price of VND40 million per square meter.

With VND1.9 billion, a buyer can now get a 49-square meter apartment in District 12, but five years ago the same amount would have fetched a 65-square meter apartment in the same location.

Nguyen Loc Hanh, CEO of HCMC-based Asia Gem Real Estate Investment Jsc, confirmed that supply of apartments priced VND1 billion was dwindling and could soon disappear in the city.

Within 10 kilometers of the downtown Ben Thanh Market, there are only mid- and high-tier apartments available and their prices have been rising in recent years, he said.

Industry insiders say that rising prices of materials, construction and land fees and legal challenges in acquiring licenses were causing retail prices to surge.

Le Huu Nghia, CEO of real estate developer Le Thanh, said that land prices in some prime areas in the city had doubled or tripled in the last five years.

As land prices account for a third of project development costs, apartment prices have surged, making it almost impossible to find a billion-dong apartment, he added.

Hanh of Asia Gem Real Estate said that one of the reasons for lopsided and unstable development in the residential real estate market was the tendency for developers getting into a "race" to build similar properties in an area.

For instance, if one developer began a high-end segment project, other developers in the area tended to follow suit and a "race" would ensue.

Data from the Ho Chi Minh City Real Estate Association (HoREA) shows that between 2016 and the first half this year, only 21.8 percent of new supply was in the affordable segment.

It also shows that in the last three years, average- and low-income people and rural-urban migrants have been most affected by the shortage of affordable housing. Many workers are forced to live in small and low quality rented houses which lack security and proper services.

HoREA said that since October 2015 until now, over a hundred residential projects have faced administrative roadblocks such as determining the price of public land that was part of the project. Some of them had to go through a long process of inspection to ensure the land was rightfully owned, it added.

Data from the Construction Ministry shows that between 2015 and 2020, social housing projects met only 41.4 percent of the target with 248 projects contributing just 100,000 apartments.

Hanh said this was a big challenge for new home buyers, and the most popular option at present is to move to suburban areas and accept longer commutes.

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