Low cost housing demand very large in HCM City

HCM City Real Estate Association (HoREA) forecast that the needs of affordable housing, low cost commercial, social housing and low cost apartments for lease will approximate 1 million apartments in the next decade as current supply has met only 13% as of total demand in the city.

According to chairman of the association Le Hoang Chau, university dormitories and workers’ residence sites built by hi-tech zones’ management board and businesses have supplied only 13% of housing demand of students, workers, immigrant laborers in the city.

The rest 87% of housing demand has been provided by households and individuals who have built rental rooms which mostly do not ensure sufficient amenities as well as security and safety.

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A low cost housing project in District 7, HCM City

Surveys show that about 139,000 public cadres equivalent to 80,000 households do not have houses; 13,000 households relocated in urban planning projects and 1.2 million immigrants equivalent to 300,000 households are in need of houses, Mr. Chau says.

Low cost housing supply has been far behind demand. The city is very short of social and commercial housing for lease with the cost of renting up to VND1-VND3 million a month, he added.

At a recent conference seeking solutions for low cost housing in HCM City by the Department of Construction and HoREA, Mr. Le Huu Nghia who is director of Le Thanh Company said that the city had almost no 50 square meter apartments comprising two bed rooms at the price of VND500-VND600 million (US$22,000-US$26,000). 

Le Thanh has been the developer of 4,500 apartments for low income people in the city since 2000.

This type of apartment was highly suitable with citizens’ demand, he said.

To have such low cost products, Mr. Nghia said that investors should build 12-15 storey buildings supplying apartments of 35-50 s.q meters at the construction cost of VND12 million per s.q meter. 

Then the price of an apartment would swing from VND400-VND600 million.

Le Thanh is now developing apartments for lease in long and short terms. Specifically, a 12-20 square meter apartment will be rent at VND1.5-VND2 million a month. 

These products like rental rooms but ensure sufficient amenities.

Apartments of less than 20 s.q meters will cost at least VND5 million per s.q meter.

Counting other spending on investment, design and sales, the price must be VND160-180 million an apartment to ensure profit for investors. 

However such type of housing should be built for lease not for sales to prevent slum sites from taking shape, he said. If being for rent, apartments can be reclaimed by investors as dwellers fail to meet their regulations.

In long term, investors could abolish these apartments to rebuild or connect two or three adjacent apartments to create a larger one to suit practical demand, Mr. Nghia said.

Director of the Construction Department Tran Trong Tuan says that housing for low income people with the price of less than VND1 billion (US$44,000) is acceptable in the current situation. 

This is a lucrative segment to many subjects so there should have many price levels such as VND900, VND700, VND500 and VND300 an apartment for consumers to choose.

Secretary of the city Party Committee Dinh La Thang agreed with the under implementation idea of Le Thanh Company saying housing demand is very large in HCM City so short term solution should be apartments for lease.

SGGP

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