“The Scarcity of Affordable Homes: Why Auctioning Off Redevelopment Apartments is a Challenge”

Thousands of vacant relocation apartments, people move in and then move out

Ho Chi Minh City has nearly 9,000 state-owned relocation apartments that have not yet been allocated to residents. While these homes are lying vacant, low-income earners are desperately searching for affordable housing. To gain a more realistic perspective and suggest solutions for utilizing the relocation housing fund effectively, VietNamNet Newspaper presents to our dear readers a series of articles titled “Finding a solution for the tens of thousands of vacant relocation apartments in Ho Chi Minh City”

Low-income earners thirst for affordable housing

Ms. Khanh Linh (32 years old, from Dong Thap), a teacher at an elementary school in Thu Duc City, shared that she has been living in Ho Chi Minh City for over a decade and is still renting. After getting married, Ms. Linh and her husband dreamed of owning a small apartment to settle down.

With a savings of 1.5 billion VND and planning to take out a bank loan, the couple set their sights on an affordable housing apartment in Thu Duc City that began construction last year. Upon investigating the criteria, they found that they met the requirements to purchase a unit. However, the price of the apartment in this project exceeded their budget.

Thousands of vacant apartments at the 38.4-hectare Binh Khanh Relocation Area, Thu Duc City. Photo: Nguyen Hue

Upon learning that thousands of apartments in the 38.4-hectare Binh Khanh Relocation Area in Thu Duc City remain unoccupied, Ms. Khanh Linh expressed that if these apartments were converted into affordable housing with reasonable prices, low-income earners like herself would have a chance to own a home.

In recent months, Mr. Hoang Anh (from Go Vap District) has also been looking to purchase an affordable housing apartment priced at around 2 billion VND. However, his market survey revealed that with this budget, he could only afford an apartment in the outskirts or in a neighboring province.

According to Mr. Hoang Anh, in the past five years, the prices of affordable housing in Ho Chi Minh City have continuously increased. Prior to 2019, many projects were priced around 16 million VND per square meter, but by 2022, the price had soared to 20-25 million VND per square meter. Currently, affordable housing prices have reached nearly 40 million VND per square meter, and even then, it is not easy to find a project within this budget.

A man sits in front of an unoccupied building at the 38.4-hectare Binh Khanh Relocation Area. Photo: Nguyen Hue

Amid the shortage of commercial and affordable housing supply in Ho Chi Minh City, according to the Department of Construction, there are currently 8,948 state-owned relocation apartments that have not yet been allocated to residents. These vacant apartments are located in 85 apartment buildings or clusters in 17 districts and counties.

The Center for Housing Management and Construction Supervision, under the Department of Construction, has taken over 8,461 apartments and is preparing to receive an additional 487 apartments from local authorities. Out of the nearly 8,500 apartments under their management, the unit owes 81 billion VND in management fees.

Auctioning off thousands of apartments in one go is impractical

During a working session with the Ho Chi Minh City People’s Committee in mid-May 2024, Ms. To Thi Bich Chau, Vice Chairman of the Central Committee of the Vietnam Fatherland Front, raised the issue of thousands of vacant relocation apartments and inquired about the city’s plans to address this situation.

In response to this question, Mr. Huynh Thanh Khiet, Deputy Director of the Department of Construction, stated that in addition to the 9,000 vacant apartments, the city also has over 2,000 relocation land plots that have not been allocated to residents.

Regarding the Vinh Loc B Relocation Area and the 38.4-hectare Binh Khanh Relocation Area, the city plans to auction off 4,900 apartments and 42 land plots. It is necessary to organize the auction in accordance with regulations, as this housing fund was established with funding from the state budget.

The desolate scene at the Vinh Loc B Relocation Area, Binh Chanh District. Photo: Anh Phuong

According to the Deputy Director of the Department of Construction, in the past, Ho Chi Minh City had a plan to convert the relocation apartments serving the Thu Thiem New Urban Area project into commercial housing. However, due to various complications, this plan could not be realized.

“When determining the original price of these relocation apartments for conversion into commercial housing, the units calculated a price of 27 million VND per square meter, excluding compensation, land use fees, and other costs according to interest rates. This price is extremely high and impractical,” said Mr. Khiet.

As for the 3,790 vacant apartments at the 38.4-hectare Binh Khanh Relocation Area, the Department of Natural Resources and Environment plans to complete the legal procedures by August 2025. According to the plan, the auction is expected to take place before November 2025.

This is the fourth time that Ho Chi Minh City has announced plans to auction off these 3,790 relocation apartments. Specifically, the first time was in 2017, with a starting price of 8,800 billion VND. The second time was in 2018, with a starting price of 9,100 billion VND. The most recent attempt was in 2019, with a starting price of 9,900 billion VND.

In all three previous instances, the starting price of the 3,790 apartments increased, but Ho Chi Minh City has not yet held an official auction.

Sharing with VietNamNet, a leader of the Department of Natural Resources and Environment stated that since these 3,790 apartments are public assets, a multitude of legal procedures must be completed before putting them up for auction.

The procedure follows this sequence: Change the purpose from relocation housing fund to commercial housing; establish public ownership of common areas such as hallways, staircases, and parks; delegate authority and issue a decision on the auction; and determine the starting price…

According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), regarding the auction of relocation apartments in the Thu Thiem New Urban Area, the association has made numerous recommendations over the years. If the city persists in auctioning off all 3,790 apartments in one go, it is unlikely to succeed.

Anh Phuong