Small apartments a solution to stagnant property market

At a meeting organized by the Department of Construction in Ho Chi Minh City on September 25, many measures were discussed to revive the stagnant property market, which is seeing the worst slump in decades.

A resettlement housing project in District 2 in HCMC (Photo: SGGP)

Construction companies are left holding on to 70 percent of unsold inventory of apartments and are now asking management agencies to allow them to build smaller apartments of 50-60 square meters for lower income group people, so as to recover back some of the capital invested.

These smaller apartments, valued at around VND1 billion (US$48,000), could help in recovering costs as there is more demand for affordable housing. 

According to the Department of Construction, property construction companies have  greatly contributed towards raising the standard of living of people, but so far focused on people in the higher income bracket and neglected people in the lower income group.

Of the 45,000 apartments completed, only 40 percent of them were made for lower income groups, who are in a vast majority and in urgent need of housing.

Le Hoang Chau, chairman of the HCMC Real Estate Association (HoREA), said some new kinds of apartments have appeared in the market such as long-term rental houses and those with lease duration of 40 years. These apartments are cheaper than permanently owned houses and are stirring the market at a time when the property market is stagnant.

In order to resolve the current problem, Do Thi Loan, HoREA’s general secretary, said there should be a policy to encourage foreigners to purchase deluxe apartments or the larger apartments.

City authorities are now considering buying unsold commercial apartments to supplement the municipal resettlement housing scheme, that will still take a couple of years for completion, because of site clearance and other such delays, said Chau.

The Department of Construction in HCMC also plans to purchase mid-sized apartments of 40 to 70 square meters to ease the ongoing task of resettling hundreds of households from important project sites. 

By Nhung Nguyen - Translated by Anh Quan

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