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Firms cash in on need for cheap flats
Real-estate agents here are already capitalising on the huge need for low-cost, small apartments for low-income citizens.
This is despite profits being lower than for bigger and more luxurious apartments.
Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, is one of the many investors rushing to fill the gap as the high end of the market stays frozen and prices for big apartments plunge by half.
He said that 60-70 per cent of workers in HCM City needed houses and apartments worth between VND300-500 million (US$18,000 to $30,00) per house.
And that building homes for low-income people would be a way out for real-estate developers in the present real-estate standstill. Duc’s company plans to start building this type of apartment in two or three months.
It submitted plans for three to four blocks containing a total of 1,000 small apartments in District 12 and Go Vap district in HCM City, said Duc.
While waiting for Government comments on the housing model, 1,000 clients have already registered to buy.
"Real-estate developers have not been paying appropriate attention to this very important segment of the market," said Duc.
So far, HCM City has only built 2,780 of the 25,000 low-income houses and apartments needed, according to HCM City’s Natural Resources and Environment Department.
Experts from HCM City Real Estate Association agreed that investors should focus on building houses and apartments for average workers.
Real-estate transactions have been almost at a standstill for several months and agreements to sell have been few and far between.
One industry source said the money real-estate firms made in the last few months was not worth mentioning, but they still had to spend big money on overheads.
The Real Estate Association said financial difficulties had led several of its members to the brink of bankruptcy.
On top of this, apartment prices have also decreased by 20 to 60 per cent in the last few months.
Some companies are offering 1sq.m of floor space for VND10 million when it cost VND9-10 million a sq m to build.
Dang Hoang Vu, general director of Thanh Binh Real Estate Co., said the company had suffered losses amounting to 20-30 per cent of the value of assets.
Meanwhile, according to analysts, in recent years there have been far too few housing projects for low-income people.
This has caused a wide gap in supply and demand. Real-estate developers focused on developing high-grade apartments to optimise profit.
This is the time for investors to invest in houses and apartments for low-income earners, according to experts.
According to Le Hoang Chau, chairman of the HCM City Real Estate Association, there was high demand for houses and apartments for the average citizen, newly weds, couples, graduates and the elderly.
These people need between 25-40sq.m of space, he said. Most of them are living in narrow boarding houses with poor facilities and are in desperate need for better accommodation.
Ministry approves first low-income apartment
The Construction Ministry has given the go-ahead to Dat Lanh Real Estate Co Ltd to build two apartment blocks for low-income families, with each unit measuring 30-40sq.m, the first of its kind in the country.
Dat Lanh Co will build the 500 apartments in District 12’s Dong Hung Thuan Ward and Go Vap District.
These units come under the scope of the Law on Housing for the poor and disadvantaged, which range from 30-60sq.m in size.
Construction on the two buildings will start in the third quarter of this year with completion expected in 2010.
VNS
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