An anonymous real estate investor in Long An Province carried out a low-cost housing project of 400 apartments in 2017. They offered a price of just VND198 million (USD8,608) for each 30-square-metre apartment.
The apartments sold out in just two months but the investor made tens of billions of VND in losses.
Explaining the losses, the firm's director blamed the regulations on standards of low-cost houses which were set just the same as applied to commercial housing.
“Our building project has just five floors but we were asked to follow fire safety standards of high-rise buildings," he said. "The corridor of low-cost apartments should be about one metre wide but we were asked to make it at least 1.4 metres. In addition, regulations for the parking area, construction density, or power system, were also similar to those of commercial housing projects."
The director also complained about similar land lease fees.
"With current construction fees rising to at least VND7 million (USD304) per square metre which means over VND200 million for a 30-square-metre, we saw losses without taking into other things in account," he said.
He added that while investors in Binh Duong Province can make some profits due to the preferential land policies offered by local authorities, many investors in other localities including Long An, Ho Chi Minh City are incurring losses and have to stop.
Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company also said that low-cost housing projects boomed in 2007 when many investors were eager to join, but they soon turned away after some first loss-making projects."
Investors insisted that the government should set out better policies like offering preferential bank loans interest rates or reducing income taxes to encourage investors of low-cost housing projects.
According to a report by DKRA Vietnam, there were eight real estate projects offered for sale in HCM City in the first quarter of 2019 but none of them were low-cost projects.
Local officials and real estate experts have expressed concerns over the lack of low-cost housing projects in HCM City, which they said affected the social security.
“This reveals the unsustainable development of the market," said chairman of Ho Chi Minh City's Real Estate Association, Le Hoang Chau. "A sustainable real estate market should see the largest supplies of low-cost housing, then middle-class, while high-end apartments hold the smallest portion.
Meanwhile, leaders of some local real estate firms said that there would be no low-cost housing projects in the coming time due to a lack of land in HCM City and rising prices of land, construction materials and labour; while no clear policies have been announced to support investors of these projects.
“If there are no low-cost housing projects, the most affected are low-income people who are increasing in number in HCM City," said Nguyen Van Hau, director of Asian Holdings Real Estate Company. "We see a huge demand for low-cost houses in the area but we can’t make it if local authorities don't support us."