HA NOI (Biz Hub) — Amidst the recovery of the property market, complicated procedures and capped profits have deterred investors from converting their projects into social housing projects, noted the HCM City Real Estate Association.
The situation has put developers of many commercial projects that were registered in the past three years to be converted into social housing projects in a dilemma.
According to Le Hoang Chau, the association's president, many expenses borne by developers were not fully accounted for in determining the total cost of social housing, thus affecting the profits of the developers.
He pointed out that several projects were now stuck at the stage of calculating costs due to the gap in the market's land prices and the Government-listed prices.
The profits for developers of social housing projects were capped at 10 per cent. However, the real profits were lower, and in some cases, developers even suffered losses, according to the association.
In addition, procedures for converting commercial housing projects into social housing projects were complicated, involving several organisations, including the provincial authorities, the construction ministry, the central bank and commercial banks.
"Currently, the property market is in recovery. If these bottle-necks are not tackled, it will be difficult to encourage developers to invest in social housing projects," Chau said.
The association also said the disbursement of the Government's VND30 trillion bailout package for the property market had been slow, citing statistics that only a quarter of the package value had been disbursed by September 15.
The association proposed the deadline for the disbursement of the package be extended by two years to May 31, 2018, along with interest rates of 3-3.5 per cent for social housing apartments and 4-4.5 per cent for commercial apartments worth less than VND1.05 billion (US$46,700) per unit.
The association said the interest rates must be reasonable for low-income earners and should be based on the country's inflation. — VNS