HCM City encourages private investors to develop affordable housing
HCM City encourages private investors to develop affordable housing
HCM City will adopt incentives to encourage the private sector to develop social housing for sale and rent to address the city’s shortage of affordable homes for low-income families and industrial park workers.
According to the Municipal People’s Committee, there are about 476,000 young families that do not own a home or are living with relatives and 156,000 low-income households – including 18,000 that were displaced to make way for local projects and were not eligible for compensation, or who received compensation that was insufficient to purchase a house.
The city also estimated that it will be home to around 400,000 workers from the three industrial parks, requiring some 280,000 apartments, by 2020. However, the city could only supply a total of 40,000 homes last year. By 2020, it aims to build about 20,000 new social housing apartments and 35,000 others exclusively for workers at industrial parks.
Despite many efforts made by the southern hub to build social housing, a number of challenges remain, hampering the development of this type of property. Chief among them is the limited land resources for social housing and a lack of long-term loans for developers of affordable housing projects or those in need of affordable homes.
At the same time, a number of projects have suffered lengthy delays in land clearance and other barriers causing slow progress.
The city also has few projects offering studio apartments of 25-30 sq.m, fetching VND300-400 million per unit, or units of the same , that are suitable for low-income earners. Therefore, the city is looking to improve the diversity of affordable homes for low-income families and accommodation for workers, while providing long-term soft loans with a maturity of more than 10 years to attract developers to these projects.
It is possible for HCM City to build social housing at around VND200 million (US$8,770) per unit, the head of the HCM City Real Estate Association has said.
Its chairman, Le Hoang Chau, said the houses could be 30sq.m, built on 20sq.m of land with a 10sq.m mezzanine.
They should be built in places that already have social infrastructure, schools or hospitals, he said.
That was the strategy Binh Duong had adopted, he pointed out.
But the city first needs to identify lands to build social housing, effectively using existing public lands, he said.
Farmlands in Binh Chanh, Cu Chi and Can Gio districts are being converted into residential lands and industrial units are being forced to move into industrial parks, and these should also be used to build social housing, he said.
Lands are also available in industrial parks, processing zones and satellite urban areas like the South Sai Gon area, Hiep Phuoc Industrial Park, Tan Thuan Processing Zone, Sai Gon High-tech Park, Linh Trung I, II, III parks, Quang Trung Software Park, and the HCM City National University, according to Chau.
He suggested calling for investment from all possible sources.
"Many public and private companies have developed social housing or housing at affordable prices," he pointed out.
"Many have also built hostels to meet the needs of workers and people with low incomes," he said.
Many property developers have changed their strategy to develop housing projects with many condos with 1-2 bedrooms at affordable prices, and this has somewhat helped balance the market and meet the actual demand on the ground, he added.
HCM City has a population of nearly 13 million, nearly three million of them emigrants from other provinces and cities.
The association estimates that the demand for social houses and those at affordable prices should reach a million in the next 10 years.
The city plans to develop 39 social housing projects with 45,000 units.
About 30,000 should be ready by 2020. Around 20 per cent of them will be for rent, 60 per cent will be sold with payments to be made over many years in monthly instalments and the remaining 20 per cent will be sold for down payment.
