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Investors still turning backs on projects for lower class
Ignoring the call from the cities’ authorities, investors are not interested in injecting money in projects for low-income earners under the city’s housing programme. It is because of the lack of a suitable mechanism to attract investment in the field.
Though the real estate market is frozen and house prices have been decreasing, the prices are still unaffordable for the majority of people. Meanwhile, according to Bui Cong Giang, Director of Alpha, a real estate firm, investors do not want to build houses for low-income earners because the current financial mechanism does not encourage them to do that.
An investor wanted to build 3,000 sq m apartments for low-income earners. However, the HCM city authorities only promised to make a small capital contribution, 1-2% of the project’s cost. The city also did not commit to purchase all the apartments when the project was completed. As a result, the investor gave up the game.
Under current regulations, projects on houses for low-income earners must have the height of 5-6 storeys at maximum. Meanwhile, investors think it’s a waste to build 5-6 storey buildings. Do Thi Loan, Deputy Chairwoman of the HCM City Real Estate Association, said that as the land price is very high in HCM City, it would be unprofitable for investors to build 5-6 storey buildings.
“The state has been calling for the efficiency of land use to be improved, but the regulations on the maximum height of houses for low-income earners are contrary to the call,” Loan said.
Director of Dat Lanh Real Estate Company Nguyen Van Duc said that investors need to build 10 storeys at least to be able to cover the expenses they have to spend on land. Previously, it cost VND5-6mil for every sq m of tenement, while the figure is now VND8mil or VND9mil. Currently, when banks are tightening credit, investors need to aim at more profitable projects.
Le Hoang Chau, Chairman of the HCM City Real Estate Association, said it is really a rigid regulation that every apartment must have the minimum space of 45 sq m. Chau said that the ratio of households with 1-3 members is increasing. Therefore, the city’s authorities should be more flexible in order to ensure enough accommodations for local residents.
Real estate experts also say that it is necessary to set minimum standards for apartments, but there is no need to set standards for the heights of buildings.
A lot of investors who have grown discouraged with the city’s housing programme have been trying to provide houses for low-income earners with commercial projects.
Nam Long Company has launched E-Home apartments for medium-income earners at VND400-500mil/apartment. Dat Lanh Company has got a licence from the Ministry of Construction to build small-space apartments for low-income earners which have the average price of VND300mil.
According to the HCM City Construction Department, the city now has 218,000 labourers in export processing and industrial zones who really need accommodations. Moreover, the city needs some 30,000 resettlement apartments and 10,000 apartments for young state employees. The number is expected to increase annually as thousands of students graduate from university every year and seek job opportunities in the city.
Since HCM City kicked off the social housing programme in 2003, only 17 projects have been implemented with 3,600 apartments, a low number if compared to the number of local residents who have medium or low incomes in the city.
VNN
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