Rising costs make cheap housing unfeasible: Phu Dong Group CEO

Major developer Phu Dong Group wants to implement more low-cost housing projects, but they have become unfeasible with rising land and construction costs, said CEO Ngo Quang Phuc.

Phuc was speaking Wednesday at the official launch of the group’s Phu Dong SkyOne project in Di An town, Binh Duong province. The project is one of several affordable housing projects for young people that the group has implemented for many years, he said.

The 5,615 square meters project with a total investment capital of VND1.1 trillion ($44.55 million) will provide the market with 780 apartments of 42-72 square meters. The apartments are expected to be handed over in the second quarter of 2026.

In the southern province of Binh Duong, average apartment prices has increased from around VND30 million ($1,215) several years ago to VND40-48 million ($1,620-1,943) per square meter now. The towns of Di An and Thuan An lead apartment prices in the province.

In this context, Phu Dong SkyOne aims to quench the thirst for affordable housing in the province as well as in the Ho Chi Minh City area, Phuc said.

The project’s expected selling price is VND1.4-2.2 billion ($56,700-89,000) per unit, with 75% of the total apartments priced at VND1.4-1.8 billion.

“Compared to the general level, the prices of Phu Dong SkyOne apartments are the most affordable in the market. In addition, the project boasts very good quality and offers many amenities, specifically for young families.”

Phuc noted that soon after receiving the construction permit (end-November 2023), the group held a groundbreaking ceremony to kick off construction. Basement construction will be completed by the end of the second quarter of 2024 at the latest, he said.

“Young people need a house to settle down and we want SkyOne to be an affordable project suitable for them,” he added.

The project will have 30 floors and one basement, with the construction density of 50%. The basement will be 6 meters high instead of the usual 3.5 meters to accommodate two parking storeys, thus reducing costs.

“The selling price of over VND30 million ($1,215) per square meter is not cheap but very good in the current context. If the price is reduced further, we will make no profit,” he said.

Giang Huynh, associate director, head of research and S22M at Savills Vietnam, said that last year, Ho Chi Minh City saw no product under VND2 billion ($81,000). 90% of the transactions were in the segment of VND2-5 billion ($202,800) per unit.

"In the 2024-2026 period, the number of apartments priced at VND2-5 billion will become increasingly scarce, with supply mainly in the segment of VND5-10 billion (202,500-405,000) per unit. Therefore, home buyers in the southern economic hub may switch to buying products in neighboring areas such as Binh Duong, Dong Nai and Long An at more affordable prices," she said.

Huynh also noted that so this year, about 96% of supply in Binh Duong, Dong Nai and Long An is less than VND5 billion per unit. Therefore, these localities will ease the "thirst" for affordable housing in the HCMC area.

"Apartment products in Binh Duong and Dong Nai still maintain competitive prices compared to the HCMC market. This makes these areas attractive destinations for home buyers. In particular, housing demand in Binh Duong is increasing strongly thanks to its industrial development and increasing immigration rate, which keep market demand stable," she said.