Investors hesitant to build much-needed social housing in Vietnam over profitability concern: expert

By Kim Ngan
Tue, May 27, 2025 | 3:05 pm GMT+7

Benefits for investors not being attractive enough make companies hesitant to invest in much-needed social housing in Vietnam, says Nguyen Van Dinh, a popular property legal consultant.

Nguyen Van Dinh, a Vietnamese property consultant. Photo by The Investor.

Nguyen Van Dinh, a Vietnamese property consultant. Photo by The Investor.

Due to the 10% profit limit and the lengthy incentive approval procedures, many businesses are not interested in participating in building social housing, Dinh told a seminar, titled "Investing in social housing development: New context, new opportunities", hosted by The Investor on Tuesday.

"Existing incentives (exemption from land use fees, preferential loans, tax reductions) are in fact difficult to access or insignificant compared to profits from commercial housing investment. Moreover, investment procedures for social housing projects are considered complicated and time-consuming, discouraging investors," he added.

In Vietnam, the need for affordable housing for low-income earners and workers is urgent, especially in large cities. The Government has issued many policies to develop social housing over the past decade, but the results are still limited compared to the set goals.

According to the National Housing Development Strategy, by 2020, it is necessary to build at least 12.5 million square meters of urban social housing. However, in the 2015-2020 period, the country only completed about 100,000 social housing apartments, fulfiling 41.4% of the plan, according to Dinh.

As of early 2023, a total of only about 147,000 apartments (about 7.35 million square meters) of social housing have been built nationwide, a very modest number compared to the needs of millions of households.

Meanwhile, the price of commercial housing in urban areas has increased to an average of VND77 million ($2,970)/m2 in Ho Chi Minh City in 2023, far beyond the reach of middle-income earners, let alone low-income earners. As a result, the majority of urban workers have to rent cramped rooms, or live in remote suburban areas.

Another reason for the poor development of social housing is the lack of preferential capital for this investment area, Dinh highlighted.

After the preferential credit package of VND30,000 billion ($1.16 billion) for the 2013-2016 period ended, new capital sources were very limited. In the period of 2016-2020, the Social Policy Bank was only allocated VND2,163 billion from the budget for social housing loans, equal to 27% of the identified demand (VND9,000 billion or $347.24 million), he cited.

The four state-owned commercial banks designated for preferential loans were not allocated interest rate compensation sources, leading to almost no projects being able to borrow preferential capital during this period.

The lack of cheap capital has also caused many social housing projects to stagnate. It was not until 2023 that the Government launched a VND120,000 billion ($4.63 billion) credit program (through four major commercial banks) for investors and social housing buyers to borrow at interest rates 1.5-2% lower than the market.

However, this is only a temporary solution. Disbursement is low because the procedures and loan conditions are still difficult for low-income people to access, and the interest rates are unattractive and the loan terms are too short.

Another reason is land fund for social housing development not being guaranteed. According to regulations, commercial housing projects must reserve 20% of their area for social housing or pay an equivalent amount.

"In reality, many localities have not strictly managed this 20% land fund. Some investors ask to pay money instead of building social housing, but the money collected is not effectively reinvested in other projects," Dinh stressed.

In addition, public land fund for social housing in large urban areas is very scarce, while high input prices increase costs, making the selling price of social housing still high (about VND15-20 million ($771.5) per m² which is very difficult for low-income workers to access).

Meanwhile, most low-income workers and laborers do not have enough savings to make purchases and also have difficulty proving their income to borrow from commercial banks.

Even with preferential lending policies, the requirement to pay monthly installments for 15-20 years is a heavy burden for people. Many people do not dare to borrow to buy a house because they are afraid of not being able to repay the debt.

This leads to a paradox in some places: social housing is still unsold after being built because buyers have difficulty accessing capital. For example, some projects in Binh Duong cost VND200-300 million ($11,570) a unit, but the sales rate is slow as workers cannot borrow money.

Currently, Vietnam does not have a national housing development fund. Some localities previously established local housing development funds but later had to merge them into development investment funds, which operated ineffectively. The previous national housing strategy (2011-2020) mentioned studying the housing savings fund model, but it has not been implemented yet.

Due to the lack of a specialized financial institution, long-term mobilization and lending for social housing mainly rely on the Social Policy Bank and short-term credit packages, leading to a lack of sustainability.

"In addition, preferential tax and credit policies for social housing development still have many limitations. For example, there are no strong enough corporate income tax incentives for enterprises, and there is no mechanism for issuing social housing bonds to mobilize long-term capital," Dinh told the seminar.

The combination of the above factors makes the Government's target of 1 million social housing apartments by 2030 very challenging. In that context, the proposal to establish the National Housing Development Fund/National Housing Fund is expected to be a "push" to remove bottlenecks in capital and mechanisms, creating a breakthrough for the social housing segment, he added.

Comments (0)
  • Read More
Lenders in Vietnam now in low-rate lending race: ACB CEO

Lenders in Vietnam now in low-rate lending race: ACB CEO

The biggest “headache” for banks in Vietnam now is that profit margins are getting thinner, said CEO of Asia Commercial Bank (ACB) Tu Tien Phat.

Banking & Finance - Tue, October 21, 2025 | 4:00 pm GMT+7

PV Gas - 35 years of innovation and technological leadership in Vietnam’s gas industry

PV Gas - 35 years of innovation and technological leadership in Vietnam’s gas industry

Over the past 35 years of establishment and development (1990-2025), PV Gas, a subsidiary of state-owned giant Petrovietnam, has affirmed its pioneering position in Vietnam’s gas industry, marked by a series of groundbreaking achievements in science and technology.

Companies - Tue, October 21, 2025 | 3:45 pm GMT+7

Vietnam's consumer finance major F88 achieves 90% of year's profit target after 9 months

Vietnam's consumer finance major F88 achieves 90% of year's profit target after 9 months

F88 Investment JSC (F88), a leading consumer finance company in Vietnam, reported a cumulative pre-tax profit of VND603 billion ($22.88 million) in the first nine months of 2025, a 2.5-fold increase year-on-year, reaching 90% of its full-year target of VND673 billion.

Companies - Tue, October 21, 2025 | 3:15 pm GMT+7

Vietnam corporate earnings to be driven by credit expansion, trading activity, property recovery

Vietnam corporate earnings to be driven by credit expansion, trading activity, property recovery

With Q3 earnings season underway, results are expected to come in broadly in line with expectations. Financials should remain the largest contributors, benefiting from credit expansion and trading activity, while real estate continues to recover as project launches and sales rates improve, writes Tung Dang, associate director at Dragon Capital.

Economy - Tue, October 21, 2025 | 2:33 pm GMT+7

Inland port opens in southern Vietnam province Tay Ninh, set to become border logistics hub

Inland port opens in southern Vietnam province Tay Ninh, set to become border logistics hub

The 16.5-hectare Tan Cang-Moc Bai inland port in Tay Ninh province, southern Vietnam has been opened, offering logistics services and handling customs clearance for imports and exports.

Infrastructure - Tue, October 21, 2025 | 12:03 pm GMT+7

State-managed property trading centers will help curb speculation, price manipulation: expert

State-managed property trading centers will help curb speculation, price manipulation: expert

Establishment of state-managed real estate trading centers is expected to create a transparent transaction channel, helping control and limit speculation and price manipulation in the Vietnamese market.

Real Estate - Tue, October 21, 2025 | 8:37 am GMT+7

Vietnam's benchmark VN-Index records sharpest drop in 25-year history

Vietnam's benchmark VN-Index records sharpest drop in 25-year history

VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), saw the sharpest decline in its 25-year history on Monday, down by 94.76 points, or 5.47%, to 1,636.43.

Finance - Mon, October 20, 2025 | 5:49 pm GMT+7

Construction contractor Coteccons sets record FY2026 targets, capital base hike via share issue

Construction contractor Coteccons sets record FY2026 targets, capital base hike via share issue

Coteccons Construction JSC (HoSE: CTD), one of Vietnam’s largest construction contractors, has set ambitious targets for its fiscal year 2026, driven by a record order backlog and its push into international markets.

Companies - Mon, October 20, 2025 | 4:50 pm GMT+7

Real estate, gold markets to be fully established by 2026: Prime Minister

Real estate, gold markets to be fully established by 2026: Prime Minister

Vietnam plans to complete comprehensive legal framework for its financial, real estate, and gold markets by 2026 as part of a broader effort to modernize market infrastructure and accelerate economic growth, said Prime Minister Pham Minh Chinh.

Finance - Mon, October 20, 2025 | 3:33 pm GMT+7

Vietnam breaks ground on nation’s most advanced domed stadium in Hung Yen province

Vietnam breaks ground on nation’s most advanced domed stadium in Hung Yen province

Vietnam’s Ministry of Public Security has broken ground on a 60,000-seat domed stadium in the northern province of Hung Yen, set to become the country’s most technologically advanced sports venue.

Society - Mon, October 20, 2025 | 2:48 pm GMT+7

Workforce and logistics - keys to sustainable e-commerce growth in Vietnam: experts

Workforce and logistics - keys to sustainable e-commerce growth in Vietnam: experts

Businesses and online shop owners in Vietnam should pay greater attention to human resources and logistics, considering these factors “keys” to competitive advantage in the increasingly volatile e-commerce market, according to experts.

Economy - Mon, October 20, 2025 | 10:54 am GMT+7

Construction stocks ignite Vietnam’s market rally by year-end

Construction stocks ignite Vietnam’s market rally by year-end

FDI inflows into Vietnam are hitting record highs, while faster public investment disbursement and stable construction material costs are fueling a late-year surge in construction stocks, analysts said.

Finance - Mon, October 20, 2025 | 10:44 am GMT+7

Vietnam's central bank struggles to rein in cross-ownership

Vietnam's central bank struggles to rein in cross-ownership

Cross-ownership and bank manipulation in Vietnam have eased, yet control remains elusive as shareholders and related parties conceal ownership through nominees, the State Bank of Vietnam (SBV) said in a report to the country’s legislature.

Banking - Mon, October 20, 2025 | 8:34 am GMT+7

Viettel Post-invested $27 mln logistics center project breaks ground in central Vietnam

Viettel Post-invested $27 mln logistics center project breaks ground in central Vietnam

Viettel Post, a subsidiary of military-run Viettel Group, has broken ground on an over VND722 billion ($27.41 million) logistics center project in Danang city, which is expected to enhance the logistics capacity of Vietnam's central and Central Highlands regions.

Industries - Sun, October 19, 2025 | 7:35 pm GMT+7

Vietnam's stock market regulator introduces green bond disclosure handbook

Vietnam's stock market regulator introduces green bond disclosure handbook

By enhancing transparency and standardizing disclosures, the Green Bond Disclosure Handbook that the State Securities Commission of Vietnam (SSC) introduced will build investor trust, reduce greenwashing risks, and support the growth of a credible and resilient green finance market in Vietnam.

Finance - Sun, October 19, 2025 | 2:11 pm GMT+7

Central Vietnam province Lam Dong seeks investment for 72 projects

Central Vietnam province Lam Dong seeks investment for 72 projects

The Lam Dong province People's Committee has called for investment in 72 projects across various sectors which are set for implementation in 2025 and the 2026-2030 period.

Industries - Sun, October 19, 2025 | 1:31 pm GMT+7