Le Thanh Company Initiates Social Housing Project in HCM City

In August, Le Thanh Company celebrated the launching of the Le Thanh Tan Kien Social Housing project in Binh Chanh district, Ho Chi Minh City. This development is slated for completion in two years, aiming to deliver 1,445 long-term lease apartments, each ranging from 45 to 50 square meters.

According to CEO Le Huy Nghia, navigating legal processes for this project took a significant five years. This marks the first social housing initiative to commence in HCM City this year.

Government Plans for Social Housing Development

The government has proposed a plan to construct at least 1 million social housing units from 2021 to 2030, targeting low-income workers and those in industrial zones. HCM City has a goal to build 69,750 units, with 26,250 earmarked for the 2021-2025 timeframe.

By 2025, the city aims to finalize six social housing developments totaling 4,300 apartments. However, the Ministry of Construction indicates that only four projects with 1,200 units have been completed from 2021 to August 2024.

Challenges in Housing Development

Huynh Thanh Khiet, deputy director of the HCM City Construction Department, mentioned that Resolution 98 provides special measures to address ongoing challenges, particularly those related to legal barriers in social housing development. Nevertheless, difficulties in accessing housing credit continue to be a major obstacle.

Despite the VND120 trillion credit package designated for social housing projects, developers in HCM City have yet to secure any loans despite being eligible for the program.

Comparative Growth in Binh Duong

While HCM City faces a deficit in housing units, Binh Duong has emerged as a hot spot for real estate activity over recent years. Reports indicate that more than 10 non-social housing projects are either available or forthcoming in Binh Duong, offering at least 10,000 apartments.

Government Goals for Binh Duong

Binh Duong has been tasked with constructing 86,877 social housing units as part of the government’s plan. However, recognizing the rising demand, the provincial People’s Committee has approved an expanded blueprint for 160,325 apartments by 2030, almost doubling the initial goal. The province’s development plan for 2021-2025 includes building 42,445 social housing units, requiring an investment of VND24 trillion.

Foreign Investment in Affordable Housing

There’s also a growing foreign investment interest in the affordable housing sector in Vietnam. TT Capital Investment and two Japanese companies, Cosmos Initia and Koterasu, are planning a $150 million investment in low-cost housing over five years. One of their initiatives, the TT Avio project in Di An City, will feature 2,000 apartments priced at VND2 billion each and is expected to enter the market soon.

Additionally, Kim Oanh Group has teamed up with Singapore’s Surbana Jurong to develop various real estate projects across southern provinces, including social housing initiatives that will adhere to ‘Singaporean standards’.

Kim Oanh’s CEO, Dang Thi Kim Oanh, stated the company possesses over 500 hectares of land across southern provinces and aims to create 25,000 social housing units in Binh Duong and Dong Nai.

Proposal for Preferential Credit Packages

In late July, reports indicated Vingroup and Techcombank proposed a new preferential credit package for social housing buyers, offering a fixed interest rate of 4.5% for the initial five years, covering 100% of the apartment value for a 30-year term. However, the HCM City Real Estate Association chair expressed concerns that current packages fail to attract buyers due to uncertainties about rate changes after the initial period.

To tackle housing shortages effectively, experts suggest improving supply alongside offering attractive credit packages with interest rates around 4.8-5% and maximum loan tenures of 25 years.