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HCMC’s Social Housing Plans

Ho Chi Minh City People's Committee has launched a plan to develop one million affordable houses for the city’s workers. For this program to be successful, land plots, location and long-term payment schedules must be carefully considered.

There are several factors that will heavily determine how the city will provide houses for low-income workers. Location, land funds, payment schedules and problems with legal procedures are all factors that will impact on the success of social housing in HCMC. 

Where these houses are placed, and the surrounding infrastructure will pose a challenge to the implementation of this project. All of the homes need to meet basic construction requirements for urban housing with surrounding social infrastructure such as schools, hospitals, and healthcare facilities and technical infrastructure such as roads and transport networks. Dr Su Ngoc Khuong, Senior Director of Investment at Savills Viet Nam, said: “Ho Chi Minh City has no available land in the centre. Therefore, we can consider two options, one is to use the pre-planned land fund in these areas for low-cost housing projects. Another option is to look at areas outside the centre such as Binh Chanh, Hoc Mon, and Cu Chi as they have suitable and vacant land. However, these areas are far from where most people work. The Department of Planning and Architecture will need to consider the location of these homes carefully." 

He added: “Affordable housing will never have the same positioning as commercial real estate projects. Rather, they will be placed where land is affordable. Land funds will significantly impact costs and the effectiveness of the project. If private businesses buy the land and then redistribute it to the city, then this project will face enormous implementation issues. However, this project would be far more feasible if the government has available land funds. The target for this project is rather ambitious as it aims to supply a million apartments by 2022. For this to happen, licensing needs to happen quickly.” 

 

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The city’s labour force, who are essential to HCMC’s socioeconomic development, will be the main recipients of this affordable housing. Despite being essential to the city’s development, they were the harden hit during the Covid-19 pandemic.  Many had to leave the city due to accommodation problems as rent was a burden to this group who rely on low, unstable incomes. Dr Khuong emphasised, “If we only think about lowering rent by 30%-50%, workers will not be dedicated to the city. Instead, we should sell affordable houses with long payment schedules of up to 50 years. With affordable homes and long-term payment plans, the workforce will be able to survive even in tough times. We should think about the big picture of economic development over profits gained from renting. Buying an affordable house with a long-term payment plan will retain workers who make a huge contribution to the success of industrial parks, services, production and business in Ho Chi Minh City." 

In terms of financing,  Dr Khuong believes that it will not be financial but rather legal issues that will slow down the delivery of social housing. He added, "Assuming that the projects are approved quickly and there are cheap, available land funds – the profit margin can be between 7% and 10%. In this case, many developers and investors would be willing to participate, even if the profits are slightly lower. However, problems with legal procedures mean that projects are less profitable, which means investors are not willing to participate in low-income housing projects.” 

 

 

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