Vietnam needs more than 2.2 trillion VND (110 billion USD) in the nextfive years to develop housing, according to a report recently releasedby Ministry of Construction.
Ministry experts came up with the figure by assigning 21.5 square metres of floor space per capita.
Thereport analysed data from last year's general demographic census whichprojected that the country's total population would be more than 90million in the next five years.
This increased population would need about 2 million square metres of housing in the next five years.
AlthoughVietnam ranks eighth out of the 10 ASEAN countries in terms of thepercentage of the population living in urban areas, its urban populationhas experienced an average annual growth rate of 3.4 percent.
Currently, around 14 percent of city-dwellers rent while the rate for the population as a whole is 6.5 percent.
Thereport pointed out that makeshift housing is on the rise in citiesacross the country and attributed this to an increasing number ofmigrants from the countryside who need simple housing.
Housing for the low-income sector is a now a pressing issue and needs more Government's attention, the report noted.
Policyincentives are needed to encourage housing developers to build low-costrental apartments to meet housing demand and stabilise housing and landprices, say analysts.
The Ministry of Construction reported lastyear that 11,458 families in the country were homeless. The figure forurban areas was 4,502.
The Government does have several policiesin place to address the problem, most of which focus on helpinglow-income earners find places to live.
The policies alsoinclude a reduction in, or waiver of, land-use fees as well as cheapbank loans for both property developers and buyers. But these measureshave been only moderately successful.
The rental market forlow-cost apartments could be very profitable, ministry analysts said,because most low-income families could not afford to buy houses despiteGovernment assistance.
According to ministry analysts, rentingout low-cost housing is even more profitable than renting out luxuryapartments. A 50-square-meter apartment costs around 400 million VND(20,500 USD) to build and fetches a rent of 3 million to 5 million VND,meaning investors can recoup their money in 80 months. In comparison, ifa luxury apartment costs 3.5 billion VND (175 million USD), the rentneeds to be 43.75 million VND to recoup the investment in the sameperiod.
Le Hoang Chau, chairman of the HCM City Real EstateAssociation, said that while in the past most Vietnamese preferredowning property to renting, times had changed.
Most people who rented are young and single or migrants, the number of which has increased sharply in recent years, he said.
Ifthere is housing for rent with reasonable facilities at 3 million to 5million VND, people will be willing to rent them for long periods, hesaid.
While many firms are building houses for lease, they tendto focus on upmarket properties where the rent is 20 million VND amonth, he said, adding that they ignore the low cost end of the market.
The ministry analysts admitted there were many barriers preventing investors from entering the low-cost segment of the market.
Capitalis always a major problem for Vietnamese developers who prefer sellingtheir apartments to leasing them as returns are quicker for sales.
AnHCM City-based property investor said despite seeing the greatpotential of the low-priced segment of the housing market he could donothing about it. He said it would take him decades to recoup hisinvestment and most of his funding came from bank loans.
Buildinghouses for rent will not only help meet the country's housing needs butalso remove volatility in land and housing prices, according to oneofficial from the Ministry of Construction.
The Ministry has recently called for policies to encourage development of rental apartments, he said.
Ministryanalysts said the Government should allow developers to collect rent onland, eliminating the need to buy expensive land and clear it.
Investors should also be given assistance to get cheap loans, they added./.
Ministry experts came up with the figure by assigning 21.5 square metres of floor space per capita.
Thereport analysed data from last year's general demographic census whichprojected that the country's total population would be more than 90million in the next five years.
This increased population would need about 2 million square metres of housing in the next five years.
AlthoughVietnam ranks eighth out of the 10 ASEAN countries in terms of thepercentage of the population living in urban areas, its urban populationhas experienced an average annual growth rate of 3.4 percent.
Currently, around 14 percent of city-dwellers rent while the rate for the population as a whole is 6.5 percent.
Thereport pointed out that makeshift housing is on the rise in citiesacross the country and attributed this to an increasing number ofmigrants from the countryside who need simple housing.
Housing for the low-income sector is a now a pressing issue and needs more Government's attention, the report noted.
Policyincentives are needed to encourage housing developers to build low-costrental apartments to meet housing demand and stabilise housing and landprices, say analysts.
The Ministry of Construction reported lastyear that 11,458 families in the country were homeless. The figure forurban areas was 4,502.
The Government does have several policiesin place to address the problem, most of which focus on helpinglow-income earners find places to live.
The policies alsoinclude a reduction in, or waiver of, land-use fees as well as cheapbank loans for both property developers and buyers. But these measureshave been only moderately successful.
The rental market forlow-cost apartments could be very profitable, ministry analysts said,because most low-income families could not afford to buy houses despiteGovernment assistance.
According to ministry analysts, rentingout low-cost housing is even more profitable than renting out luxuryapartments. A 50-square-meter apartment costs around 400 million VND(20,500 USD) to build and fetches a rent of 3 million to 5 million VND,meaning investors can recoup their money in 80 months. In comparison, ifa luxury apartment costs 3.5 billion VND (175 million USD), the rentneeds to be 43.75 million VND to recoup the investment in the sameperiod.
Le Hoang Chau, chairman of the HCM City Real EstateAssociation, said that while in the past most Vietnamese preferredowning property to renting, times had changed.
Most people who rented are young and single or migrants, the number of which has increased sharply in recent years, he said.
Ifthere is housing for rent with reasonable facilities at 3 million to 5million VND, people will be willing to rent them for long periods, hesaid.
While many firms are building houses for lease, they tendto focus on upmarket properties where the rent is 20 million VND amonth, he said, adding that they ignore the low cost end of the market.
The ministry analysts admitted there were many barriers preventing investors from entering the low-cost segment of the market.
Capitalis always a major problem for Vietnamese developers who prefer sellingtheir apartments to leasing them as returns are quicker for sales.
AnHCM City-based property investor said despite seeing the greatpotential of the low-priced segment of the housing market he could donothing about it. He said it would take him decades to recoup hisinvestment and most of his funding came from bank loans.
Buildinghouses for rent will not only help meet the country's housing needs butalso remove volatility in land and housing prices, according to oneofficial from the Ministry of Construction.
The Ministry has recently called for policies to encourage development of rental apartments, he said.
Ministryanalysts said the Government should allow developers to collect rent onland, eliminating the need to buy expensive land and clear it.
Investors should also be given assistance to get cheap loans, they added./.
