Developers pin hope on social housing in dire market

By Minh Son, Vu Le   April 18, 2023 | 11:48 pm PT
Developers pin hope on social housing in dire market
A social housing project in Ho Chi Minh City. Photo by VnExpress/Quynh Tran
Housing developers are turning to social and affordable housing again to survive in a collapsing market.

Social housing is a segment that is always in high demand but has little supply. Experts have been pointing to a growing scarcity for the last two years, but developers were too busy in the high-end segment since the market was booming.

Then, when the market slumped at the end of last year, social housing began to get attention even from developers renowned for high-end housing.

Vinhomes, the largest developer in the country, said its social housing project, Happy Home, is "one of the development focuses" in the near future.

It expects to begin the project later this year across a number of provinces and cities such as Hai Phong, Hung Yen and Khanh Hoa.

It said all projects under the Happy Home brand would be the first social housing with a full ecosystem including schools, shopping malls, children’s playgrounds, parks, sport areas, and other facilities.

Other big names in the market like Him Lam, Novaland and Bitexco are also set to enter the social housing segment in the next few years.

In the south, major developer Hoang Quan Group is poised to reenter a segment that used to be its forte.

The company plans to increase revenues to VND1.7 trillion ($72.36 million) in 2023. Tra Vinh and Tay Ninh provinces are where most of its social housing projects are planned.

Nguyen Quoc Hiep, chairman of property developer GP Invest, told VnExpress that social housing is the way out for developers despite its smaller profit margins since other projects are stuck due to legal and liquidity reasons.

In the past, when the market was at rock bottom from 2011, the social housing segment, with its good liquidity, kept it afloat.

Nguyen Mac Hoai Nam, general director of consulting company Nam Phat, agreed that social housing could not only save businesses but also the market itself.

The segment enjoys both liquidity and funding for both buyers and sellers, he pointed out.

Le Hoang Chau, president of the HCMC Real Estate Association, said the interest rate on loans to the social housing segment is 8.7% whereas even businesses with excellent credit ratings could only borrow at 11-11.5% if they develop commercial housing.

Admittedly, this segment faces similar legal hassles as commercial housing and is also tightly regulated: its profit margin is capped at 10% and prices and target buyers mandated by the government.

Hiep said: "Land and investor selection are also important. They will be the long-term driving force for social housing."

The government has announced plans to build at least one million social housing units between now and 2030 at a cost of VND849 trillion.

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