Millions of industrial park workers in need of housing

Vietnam currently employs around 4.5 million workers at its industrial parks, and around half of them are in need of accommodation, equivalent to 12.5 million square meters of housing, according to property consultancy Savills.

Worker housing remains limited due to a lack of investors, the firm said in a new report. The current supply only meets nearly 30% of the actual demand. Savills Vietnam said investment opportunities await housing developers in this segment.

"With the continuous development of the industrial sector, stable foreign direct investment inflows, large industrial workforce, and investment incentives from the government, workers’ housing will be an attractive segment in the near future," said Nguyen Hong Van, deputy director of valuation and consulting services at Savills Hanoi.

"Due to this shortage, residents near industrial parks have built housing for rent, but many buildings are old and in need of repair, leaving workers facing health and safety risks.”

Hai Phong city in the north has 14 industrial parks (IPs) and 26 industrial clusters with over 200,000 workers, including 50,000 migrants. The city has 15 new IPs in the pipeline for development, which would employ a further 300,000 people, meaning 1.5 million square meters of housing is needed, according to Savills data.

Most workers in Hai Phong rent their accomodation. A field survey by the consultancy shows that rooms built by residents for rent in Thuy Nguyen district, where the VSIP Hai Phong and Nam Cau Kien IPs are located, have an average compound rent in the range of $3.2-4.2 per square meter per month, Van said.

In addition, housing for workers at LG Display Hai Phong (278 units) and Golden Peak JSC (330 units) in the northern city are around 95% full, she added.

Vietnam only adopted a legal framework for worker housing after Decree 33 was issued by the government in early 2023, which includes important commitments for worker and social housing. The government has also provided incentives to encourage investment in the sectors. Under current regulations, at specific industrial parks, at least 2% of the total area must be reserved for housing purposes.

A proposal has also been made to scrap land use fees for worker housing. Other financial incentives have been proposed for developers, such as reduced value-added tax and corporate income tax.

Construction costs can also be deducted when calculating corporate income tax. Developers will also have access to concessional loans from the Vietnam Bank for Social Policies (VBSP) and other credit institutions.

The government's VND15 trillion ($637.5 million) credit support package is also available. Decree 33 states that employees wishing to buy or rent budget housing can access loans with interest rates of 2% per annum in 2022 and 2023.