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Is the Social Housing Project Series Launch Cooling the Condo Market?

22 December, 2024

A Surge of New Project Commencements and Approvals

The 319 Corporation under the Ministry of Defense has just organized a groundbreaking ceremony for a social housing project in Uy No, Dong Anh district, Hanoi.

This is the first project of the 319 Corporation in the field of social housing construction, with a total investment of over VND 600 billion. The project is built on an area of 15,286m2; with a total construction area of 6,879.6m2, consisting of 4 blocks of 9-storey buildings (the total construction floor area of all 4 blocks is about 61,086.2m2, and the construction density is 45%). The expected supply is 466 apartments, and the project is expected to be completed by October 30, 2026.

At the beginning of December 2024, a social housing project at land lot NO1, Ha Dinh Urban Area also commenced construction after a long time of preparing procedures. It is expected that the construction will take 30 months.

The project has an area of over 9,300m2 belonging to the 20% land fund of Ha Dinh New Urban Area. The building is 25 stories high, including: 5 podium floors, 20 apartment floors, and 1 basement, with a total of 440 apartments; construction area of over 3,700m2; total floor area of over 62,500m2; and a population scale of 1,230 people.

Ha Dinh social housing site recently commenced (Photo: N.M)

Previously, on November 28, the Hanoi Department of Construction granted a construction permit to the joint venture between Himlam Thu Do Joint Stock Company and BIC Vietnam Joint Stock Company to build the CT1 high-rise apartment building under the Thuong Thanh social housing project and infrastructure connections in Long Bien district.

The permitted project consists of 22 floors above ground, 1 tum, and 3 basement floors. Upon completion, the project will supply about 600 apartments to the market, with apartment areas ranging from 64 – 77m2.

In addition to the above projects, another social housing project that has attracted attention in the Hanoi market is the NHS Trung Van project, which is in the completion stage. It is expected that this project will be handed over in the first quarter of 2025.

It is known that in the list of plans for investment construction projects of houses and urban areas (batch 3) of the Hanoi Housing Development Plan for the period of 2021 – 2025, there are 6 social housing projects in 4 districts and counties, including: Ba Dinh, Long Bien, Thanh Tri, and Thach That.

According to the Ministry of Construction, in 2024, the whole country aims to develop 130,000 social housing units for low-income people and industrial park workers. However, only 21,000 social housing units have been completed, equivalent to over 16% of the plan. In 2025, the Ministry of Construction sets a plan and task to complete the number of social housing units estimated at over 100,000 units.

A large supply of social housing will help cool down the currently high commercial apartment prices in major cities such as Hanoi and Ho Chi Minh City.

Proposals to Remove Obstacles for Social Housing Enterprises

Talking to Tien Phong Newspaper, Mr. Nguyen Huu Duong, Chairman of Hoa Binh Group, said: “The biggest obstacle to social housing projects is that the procedure process is too slow. Our project in Hoang Mai district has been delayed for three years, causing great damage to investors. I propose to speed up the planning and allocate clean land funds for social housing,” said Mr. Duong. Also, according to Mr. Duong, speeding up the procedures will reduce prices for social housing, benefiting low-income earners. “In the central district, if the procedures are fast, we can apply modern construction technology to build houses at a price of about VND 20 million/m2. In the suburban area, we can build houses at a price of only VND 15 million/m2,” affirmed the representative of Hoa Binh Group.

To increase the supply of social housing, Mr. Le Hoang Chau – Chairman of Ho Chi Minh City Real Estate Association – said that the association has just proposed a tax incentive mechanism for enterprises investing in social housing. Accordingly, the tax incentive policy for investors of social housing projects is only for rent, with a reduction of value-added tax to 3% and corporate income tax to 6%.

Mr. Chau said that applying a corporate income tax rate of 6% for enterprises investing in building social housing for rent will help to concretize the tax incentive policy for this subject (as stipulated in the 2023 Housing Law).

In addition, Mr. Chau also proposed that the interest rate for loans to investors should only be at the level of 3 – 4.8%/year.

Ngoc Mai