HÀ NỘI – The property market expects to see a wave of developers expand into affordable housing developments, which faced a severe shortage until the Government took steps to promote investment.

Prime Minister Nguyễn Xuân Phúc encouraged investments in affordable homes at a conference on Monday in Hà Nội.

Heating the market, development giant Vingroup--previously known for its luxury real estate brands--introduced VinCity, a brand for affordable homes.

Lê Khắc Hiệp, deputy chairman of Vingroup, said that VinCity was not social housing, but instead a development for  low and middle income earners.

VinCity apartments will be priced from just VNĐ700 million (US$31,250) per unit, lower than the current market’s average price at VNĐ1 billion of similar apartments, but they will still offer adequate facilities such as schools, hospitals, shopping centres and parks with ensured quality and professional services.

In an announcement late last week, Vingroup said that around 200,000 – 300,000 Vincity affordable apartments would be developed in the next five years.

Vincity will first be built in seven provinces and cities, including Hà Nội, Hưng Yên, HCM City, Hải Phòng, Thanh Hóa, Hà Tĩnh and Nha Trang. In Hà Nội and HCM City. The gated urban areas will be developed in suburban districts to ease population density and traffic pressure in the downtown areas.

Hiệp said that construction is expected to start early next year in all seven provinces and cities. Vincity will build in Gia Lâm and Đan Phượng districts in Hà Nội and District 7 and District 9 in HCM City.

Apartments will be between 35 sq.m and 90 sq.m with prices from VNĐ13 million to VNĐ19 million per sq.m.

Vingroup’s expansion into affordable housing has cheered the market, which had been warned of an imbalance between supply and demand since 2015.

According to Lê Hoàng Châu, president of HCM City Real Estate Association, this is good news for home-seekers, especially low-income earners.

Experts said that the giant developer’s capitalisation on affordable homes will cause other developers to reconsider their competition strategies and place greater focus on this segment, which will contribute to move the market’s supply and demand toward balance and benefit home buyers.

“Affordable homes are still of good liquidity, but the shortage remains severe,” Châu said, forecasting that affordable housing will continue to lead the market next year.

Besides VinGroup, several property developers--including Ecopark and Him Lam--are taking steps into the field.

Experts say expanding into this segment will be a smart move for property developers, as the Ministry of Construction forecast that 70 per cent of market demand will be for affordable housing in 2017.

Nguyễn Hoài An, CBRE Việt Nam Director of Research, Consulting and Asset Management Services, said that competition in this segment will grow harsh, which should urge developers to focus on quality and infrastructure development.

An said that the reason why property developers are turning their eyes from luxury appartments to affordable homes is that the former’s sales are showing signs of slowing down while the market for the latter is getting thirstier.

Expert Lê Bá Chí Nhân said that developing affordable homes of good quality and facilities requires land availability, which will be a major factor for developers. - VNS