A series of low-cost and medium range housing construction projects got underway in early 2010. Property businesses currently are shifting their investments into this market segment instead of rushing into building hi-end apartment units as was the case not long ago. Specialists and some business leaders forecast low-cost housing will be the most sought-after in 2010 and this will probably be the catalyst for development of the property market in the coming period.
A shift in the investment direction
So far this year, a great many low-cost housing projects got started in Ho Chi Minh City such as two 20 storey, 180 apartment unit housing blocks for low-income people in district 6 being developed by the Hai Ha Production and Trading Company Limited.
Earlier, the construction of three 12-storey block Binh Tri Dong B residential quarter in Binh Tan district with over 352 apartment units with areas ranging from 45.9sq.m to 67.3sq.m started by the Hai Thanh Company Limited in association with Vinaconex Xuan Mai at a price of around VND11.6 million/sq.m begun. A Vinaconex Xuan Mai representative said besides the project in the first quarter of 2010 the company will build 1,500 additional apartments in Da Nang and more 1,500 apartments in Ha Dong (Hanoi) for low-income people at an estimated price of VND8-9 million/sq.m.
The Anh Tuan Construction and Housing Development Company Limited have invested in a housing project for low and medium income people in Nha Be district. The company leadership said that in the coming period the company will focus on building low and medium-cost housing as it is now still in a limited supply against soaring demand.
In Dong Nai province, a low-cost housing project in Long Thanh district that is developed by the Phuc Dat Real Estate Company comprising nearly 1,000 apartments began construction at a price level of over VND8 million/sq.m.
The chairman of Ho Chi Minh City Real Estate Association, Le Hoang Chau, said that investing in low-cost housings generates lower profits then investing in hi-end property, but project developers could sell it much quicker as their price suits most people. This is evidenced through the fact that housing for low and middle income people in the Tan Mai, Le Thanh, E-Home, and Lilama SHB 584 housing projects have been selling very well in past months.
Meanwhile, the chairman of the Board at the Thu Duc Housing Development Joint Stock Company, Le Chi Hieu, forecasts that the supply of medium-priced housing will rise sharply in the coming period when many investors concentrate on this market segment. Ascribing why so many investors are interested in low-cost and medium-range housings, Mr. Hieu said that property businesses have recognized the vast demand in this market segment and have accumulated a wealth of experience in apartment building. In addition, medium-quality housing does not require enormous investment and is not very demanding in the requirements from constructors.
A drop in the ocean
There are 263 operative low-cost housing projects across the country thus far with a combined investment capital of around VND72.710 trillion with 205,380 apartments, providing homes for about 821,520 people. Deputy Minister of Construction Nguyen Tran Nam said around 30 housing projects for low-income people will get underway in 2010. Between 7,000-10,000 low-cost housing units will become available in Ho Chi Minh City and Hanoi alone.
However, according to specialists such numbers of housing is only a drop in the ocean as there are more than two million people working either directly or indirectly in industrial parks throughout the country and nearly three million students. In addition, around 600,000-700,000 state officials and many other low-income people in urban areas struggle to find suitable accommodation.
The director of Hai Thanh Company Limited, Vo Thi Hong, said that the supply of housing in Ho Chi Minh City could only meet about one third of the demand, particularly that for low-cost housing. Meanwhile, the deputy director of Dong Nai Construction Department, Nguyen Thanh Long, said the province presently needs more than 1.4 million square meters of low-cost housing, in the meantime only a handful of such housing projects exist in the province.
The general director of a property company in Ho Chi Minh City, who have been involved in low-cost housing projects for many years said that only low-cost housing with good locations as well as available transport infrastructure is easy to sell. Low-cost housing projects in locations with crumbling transport infrastructure could hardly find buyers. In addition, people want locations where they could find basic living facilities such as schools, hospitals, markets and entertainment centers./.