Vietnam greenlights controversial micro apartments in big cities

The Construction Ministry has approved the construction of commercial apartments as small as 25 square meters (270 square feet), compared to the earlier minimum requirement of 45 square meters (480 square feet).

The new regulation, effective July 1, requires this type of apartments to have at least one bathroom and one bedroom with natural light.

The number of apartments between 25 and 45 square meters must not exceed 25 percent of total units in a project, the ministry has said in its latest circular on the topic.

This issue has been debated for years with those opposing the move saying it would create slums in Vietnam’s biggest cities.

HCMC authorities had in early 2018 said that such a policy will attract more immigrants to the city of 13 million and apply even greater pressure on an overburdened infrastructure, worsening chronic problems like severe traffic congestion and flooding.

Tran Ngoc Chinh, chairman of the Vietnam Urban Development Planning Association, said that a micro apartment could end up accommodating several residents living together to save costs, and eventually turn into an "elevated slum."

Nguyen Hoang, director of market research at real estate firm DKRA Vietnam, said this type of apartments could disrupt urban planning strategies in big cities.

But the Ho Chi Minh City Real Estate Association (HoREA) has voiced support for the new regulation, saying this could be the solution to the city’s shortage of affordable apartments.

It said Vietnam is seeing a rising ratio of one or two-person households, noting that such units accounted for 32 percent of the total last year.

An estimated 7.4 percent of HCMC’s population live in apartments under six square meters, while 33 percent of households live in rented apartments or houses because they cannot afford to buy their own, it said.

Almost three million immigrants in Vietnam’s largest city are in need of small apartments. Hundreds of thousands of immigrant workers in the city live in low quality neighborhoods near industrial zones, it said.

Micro apartments, which are estimated to cost around VND750 million ($32,200) each, will be a suitable housing option for this group of residents, who are living in apartments which are even smaller than the new standard, it added.

Some experts say the micro apartment policy will work only if it is well managed.

Do Thi Thu Hang, director of advisory services at real estate firm Savills Vietnam, said micro apartments will be affordable to many residents, but they need to be built in tandem with good infrastructure of utilities, fire safety and waste disposal system.

Surrounding infrastructure such as roads, schools and hospitals will also be key for the success of this type of apartment, she said.