Apartment buildings in Hanoi. Photo by Shutterstock/Yeon Bak.
Hanoi needs VND90 trillion ($3.88 billion) to develop 7.2 million square meters of social housing in the next five years amid a shortage of low-cost residential real estate.
The capital city had planned to develop 6.2 million square meters of social housing in the 2016-2020 period, but only managed a little over four million square meters, or 65 percent, Chu Nguyen Thanh, CEO of the Hanoi Investment Fund for Development (HANIF), said at a recent meeting.
The figure comprises 59 social housing projects and three commercial ones that have parts dedicated to social housing.
With funding a major obstacle to social housing development, Hanoi authorities had allowed developers to access preferential credit from HANIF over the last five years. Such credit typically constitutes 20-30 percent of total investment, with the remaining amount sourced from commercial banks.
Thanh said that her organization targets lending around VND350 billion from now until the end of this year for social housing development and has earmarked another VN600 billion for the purpose next year.
Affordable apartment development has been a headache for Vietnamese authorities in recent years as developers focus on building projects in the mid- and high-price segments for higher profits. Several reports and industry insiders have noted that the supply of low-cost apartments has all but disappeared in major cities.
Demand for houses and apartments in the mid- and high-priced categories, priced at VND25 million per square meter onwards, only accounts for 20-30 percent. The remaining 70-80 percent of the demand is for affordable housing priced VND25 million or lower, according to a report by the Ministry of Construction.
There are 249 social housing projects with 104,200 units nationwide and another 263 with 215,800 units are being developed, it said.