Property developers move with the times

According to the Resolution 02/NQ-CP taken effective from January 7, 2013, state-owned commercial banks have to provide at least 3 per cent of total credit to homebuyers to buy social housing. At the same time, corporate income tax (CIT) imposed on social housing developers will be reduced to 10 per cent from July 1, 2013 to encourage more developer to build social housing.

The Ministry of Construction (MoC) said that in Hanoi, Ho Chi Minh City and Danang markets several property enterprises have registered to change purpose of projects from commercial housing into social housing. The idea is to stimulate occupancy in a market now burdened by more than 40,000 unsold housing units while providing developers with a lower CIT rate, land rent exemption and preferential credit packages offered to social housing projects.

Doan Chau Phong, deputy director of Vinaconex, revealed that a 18.5 hectare commercial housing project in Northern An Khanh urban area in which Vinaconex is an investor had won approval to convert into social housing project.

Vinconex is also planning to build another 50ha social housing project in Dai Ang urban area, Thanh Tri district. “Beneficial policies in the Resolution 02/NQ-CP to social housing project will be reflected in these two projects,” Phong said.

Meanwhile, Hanoi Investment and Construction Joint Stock Company is seeking the Hanoi People’s Committee’s approval to turn part of its expanded Trung Van urban area project in Tu Liem District into low-income apartments.

The expanded Trung Van urban area covers 15.6ha, with a total investment capital of nearly VND400 billion ($19 million). According to the investor’s proposal, 55 per cent of the apartments will be built for low-income families, with the rest offered at market rates.

In the frozen real estate market, commercial housing projects are finding it more difficulties to attract customers. Hence, changing purpose of projects does not only attract preferential treatments, but may enable developers to escape their troubles, said Nguyen Viet Truong, general director of Hanoi Investment and Construction.

Nguyen Tran Nam, deputy minister of Construction, said that the changing purpose of projects will help to spur economic growth, reduce huge property inventory and ensure social security.  “The ministry (MoC) asked localities to shortly introduce regulations on conversion of commercial housing into social housing projects right in 2013’s first quarter, aiming to kick off construction of such social housing projects in the later part of 2013,” Nam said.

Phan Thanh Mai, general secretary of the Vietnam Real Estate Association, said that the frozen property market forced investors to change purpose of projects which would feed the market with more suitable products.