Affordable Housing Project
Ho Chi Minh City, Vietnam

Affordable Housing Project
Ho Chi Minh City, Vietnam

Cepta Holdings’ affordable housing development play, during Vietnam’s golden age

Vietnam’s property market remains fundamentally strong, buoyed by real owner-occupier demand which has been resilient despite the pandemic.

Vietnams urbanization in today’s fast-paced world is inevitable, especially in emerging economies. Vietnam’s population has grown rapidly from 66 million in 1990 to more than 96 million in 2019. This makes Vietnam the third-most populous country in Southeast Asia after Indonesia and the Philippines.

Migration from the countryside is the key process driving urban population growth. The rural population is attracted to urban areas by employment opportunities, better standard of living, educational facilities, infrastructure, and need for status.

The World Bank expects Vietnam’s urban population to grow by 2.4 per cent per annum until 2025, the highest growth rate in Southeast Asia.

Like other developing nations, Vietnamese cities face an imbalance between the supply of available housing and satisfying the actual demand. This is a marked change from 10 years ago when the median household size in urban Vietnam was between two and three generations. In order to provide for its inhabitants, a growing city is expected to cater to their basic needs, starting with affordable housing.

Cepta Holdings’ studies indicate, the total supply of completed apartments in Ho Chi Minh City and Hanoi in the last quarter of 2019 reached more than 201,700 units and 224,179 units respectively in all segments, equating to the rate of 17 apartments per 1,000 people. The focus should be on the mass housing market as this is the segment with the highest demand.

The government is seeking ways to encourage developers to undertake more affordable housing projects to meet the housing needs of the city.

While the general definition for affordable housing includes components such as usable area, price, and reasonable expenses, the key factor for this segment, in our opinion, pertains to the size of the habitable units, provision of basic amenities, as well as cost and location of the project. Especially, when it comes to pricing.

Affordable and mid-end residential projects are likely to sell reasonably well, given affordability levels. Furthermore, the supply growth in these segments is much lower than in premium projects so competition for buyers will be less intense.