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Efficiency of low-cost homes doubted

HANOI – Viglacera’s launch of 1,500 condos worth between VND300 million to VND500 million a unit has attracted public attention since late last month. Besides views supporting the low-cost housing project, large numbers of consumers and investors are still doubtful about its efficiency.

The construction of 1,500 condos for low-income people by Viglacera Corporation in the urban area Dang Xa 2 in Gia Lam District in Hanoi is expected to meet housing demands of about 6,000 locals when put into use in the second quarter in 2014. Representatives of the developer said apartments of 30-50 square meters are priced from VND300 million to VND500 million each.

Lai Thi Huyen, who has been living in Hanoi for 20 years but has still been unable to buy a home, is very excited about the above news. She said she is unable to buy a low-cost apartment at VND600-800 million but with the price range of VND300-500 million, chances are her family can afford to own an apartment near Hanoi.

However, Huyen is worried that each flat covers just 30 to 50 square meters, so it cannot accommodate three generations of her family.

An architect says that with the construction cost of VND3 million a square meter, homebuyers can own a 100-square-meter unit worth VND300 million. The problem is they can only buy a 30-square-meter home with the same amount of money due to the present sky-high land prices, he noted.

Nguyen Thanh Cong, who is searching for homes costing VND300-500 million a unit, said he prefers a 25-square-meter serviced apartment rather than a private home of 30 square meters.

In the meantime, there is a misunderstanding among many people that the price of low-cost housing has edged lower. Speaking to local media at the groundbreaking ceremony of the project in Hanoi, Tran Thanh Tung, deputy general director of Viglacera, admitted his company had no choice but to make flats smaller to fix the price at VND300 million a unit.

In fact, a majority of people said they would carefully consider buying these apartments despite their initial positive reaction to the scheme. The construction of nearly 2,000 flats has sparked worries about future demand, especially when low-cost housing demand is still low as recorded by industry insiders.

Meanwhile, according to a report posted on the Government’s portal (, Hanoi plans to develop condos worth from VND300 million to VND500 million each. The city will also start work on some projects within the last quarter this year after finishing the list of the projects to be developed by 2015, with investment capital sourced from land use right transfers, ODA loans and all economic sectors.

As such, the effort to help low-income people turn their dream of owning a home into reality is placing pressure on the struggling realty market, which has already seen many low-cost housing projects grappling with poor sales.

From The Saigon Times Daily.

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