At a recent conference in Ho Chi Minh City on the real estate market in Asia Pacific, Ir.F.Teguh Satria, Chairman of FIABCI Indonesia, talked about the success of Indonesia’s model of building houses for low-income earners.
He said that in Indonesia, apartment buildings have a maximum of six stories and no elevator. Every apartment has a space of 21-36 sq m, and the maximum price is $15,000 (VND250mil). Meanwhile, the average land price in Indonesia is $1,000/sq.m., the same price as in HCM City.
The Government of Indonesia has been applying these measures to support low-income earners in buying houses. People are able to make payments through installments over 30 years, while they can also receive Government support in bank interest rates. Only people who have an income of less than $480 a year, are eligible to buy these apartments. Meanwhile, construction companies enjoy the low construction tax of 1% (the normal tax is 5%) and enjoy VAT reduction.
These measures allow companies to earn a profit of 10-15%, and allow low-income earners to buy houses without completely emptying their pockets. Indonesia has built 100,000 apartments over the last two years.
And the opportunity for Vietnam
In HCM City alone, there are 200,000 laborers working in industrial zones and export processing zones, and over 1.5 million immigrants who need accommodations.
The HCM City Real Estate Association has asked the Government to amend the Housing Law to allow the building of apartments with a space of less than 30 sq.m., which will help to reduce the price of apartments
Though the proposal has not yet been approved by the Government, a lot of real estate companies have jumped into the market of houses for low-income earners.
Le Viet Hai, General Director of Hoa Binh Construction and Real Estate Corporation, said that now is the right time to develop the a supply of houses for low-income earners.
Hai said that with the current decrease in the price of construction material and the oversupply of high-grade real estate projects, investors will inject money in building low-cost apartments
He believes that if the Government has suitable policies, construction companies will spend money on developing suitable construction processes, which will allow for the reduction of the construction cost by 20-30%.
If this is able to happen, the price of a 30 sq.m. apartment will cost only $20,000, and the price could be decrease even further if construction companies were able to benefit from tax reductions.
(Source: Dan tri)
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