Mini apartments: Housing solutions for low-income people

Remove difficulties for the Condotel market

Small-sized apartments will solve the housing needs of people with low income.

Ho Chi Minh City market set a new price level

According to the Ho Chi Minh City Real Estate Association (HoREA), 34.3 percent of the population is unmarried; 6.4 percent either divorced, separated, or widowed are in need of a small apartment. Up to 50,000 couples get married every year and have demand for small apartments ataffordable prices. In addition, the majority of more than 200,000 state officials, officersin armed forces, health, education sectors and workerswishing to have houses, especially small apartments or social housing.

In particular, the lack of small-sized apartments and affordable prices always attract the attention of the whole market from investors to customers, especially those who buy to stay and have limited financial levels.

Mr. Pham Lam, General Director of DKRA Vietnam Joint Stock Company, said that according to the statistics of DKRA Vietnam in 2019, the proportion of Grade C apartments (less than 50 m²) in each project only accounted for 22 – 35 percent. Besides, studio apartments, old apartments, officetel apartments, and condotels with an area of 25 - 50m²are very popular, showing the needs of the market.

On the other hand, according to HoREA's statistics, the real estate price in Ho Chi Minh City is at highest level. In the first six months of 2020, the HCMC apartment market set a new price level, an average increase of 10-15 percent, some places increased 40 – 60 percent compared to the end of 2019.

In the first quarter of 2020, in District 2, an Empire project tower was also offered for sale at around VND200 million/m². In addition to Empire, projects such as The River Thu Thiem and Sunshine Venicia are also expected to cost around VND115 million/m². In District 7, at the end of 2019, the price of Hung Phuc Residence and Eco Green Saigon projects is only about VND40-50 million/m². However, currently some projects in Phu My Hung area have reached VND70 million/m². Even in the neighboring districts such as BinhChanh, Binh Tan and District 12, the price also increased from VND35 to 45 million/m2. District 9, Thu Duc, which is famous as the place of cheap apartments, now has jumped to VND38 - 40 million/m².

Therefore, small apartments are the best choice for customers with the most limited financial ability.

Avoid ruining the planning

Currently, innovations in policy are seen as an effective legal tool to remove difficulties for the real estate market. Notably,Circular 21/2019/TT-BXD National Technical Regulations on apartment buildings issued by the Ministry of Construction with the minimum area of use. The size of the apartment is not less than 25m² for commercial apartments and number of flats whose area is less than 45 m2 must not exceed 25 percent of the total number of apartments of the project, opening up high expectations for housing for low-income workers in the city.

However, many experts are concerned that small apartments may lead to the overload of urban infrastructure system and the occurrence of "slums". Mr. Le Hoang Chau, President of the HoREA, said that over the past 10 years, especially since 2010, there has been a “boom” in the construction of mini apartments with many floors and mini apartments in urban areas.

Thus, the HCMC Real Estate Association has sent a written request to the Prime Minister to amend and supplement Clause 2, Article 46 of the 2014 Housing Law, as follows: “Households and individuals in urban areas must build and renovate houses in accordance with the law on construction and take responsibility for housing quality”.

In cases where households and individuals wish to build or renovate separate houses for non-business purposes, they must conform to plans already approved by competent authorities, except for cases of exemption from construction permits under the provisions of the construction law and must ensure the connection with the common technical infrastructure system of the urban center; it is not required to make a feasibility study on construction investment or a technical and economic report on construction investment.

On the other hand, allowing the construction of 25m² apartments also makes the population in an apartment building increase significantly, causing many issues regarding residential area management, urban management as well as pressure on transportation infrastructure, engineering and utilities for the project.

Therefore, experts believe that it is necessary to plan the area to be allowed to build apartments below 25m². In Ho Chi Minh City, the deployment of 25m² apartments should be done in the Ho Chi Minh City area including Ho Chi Minh City and neighboring provinces such as Long An, Binh Duong, Ba Ria - Vung Tau and Dong Nai.

Choosing these provinces because of the large land fund and suitable land prices, avoiding focusing on the central area to increase pressure on infrastructure and transport. At the same time, the Government needs to have a national-scale housing program, especially for first-time home buyers; as well as consider urban planning with a vision of 50 years.