The Ministry of Construction’s proposal to allow housing developers to convert commercial housing projects into low-income housing could benefit both the firms and low income earners, but the conversion would not be an easy task, according to analysts.
The ministry’s Circular No 02 that took effect on April 22 provides guidelines for conversion of commercial housing apartments to social (or low-income) housing and others.
Many said that the circular would enable low-income people to get easier access to a shelter and also enable property developers to liquidate their inventories.
Le Hoang Chau, chairman of the HCMC Real Estate Association (HoREA), said the circular is of great significance since it would help developers resolve their inventory problem and enable government workers, low-income people, and military personnel to acquire housing.
According to the HCM City People’s Committee, demand is very high, particularly for social housing.
A decree to take effect on June 6 lists the categories of people entitled to buy “social housing.”
They are those who received merit certificates from the Government; public officials and civil servants; members of the armed forces; workers; people whose earnings are below the income tax threshold; poor urban households; disabled people and senior citizens living on their own; those who have returned public houses to the State; and those yet to have land allocated for resettlement.
In just two months the city has received 800 applications from people eligible to buy, the committee said.
Meanwhile, statistics from the city Department of Construction show that the city has in inventory nearly 14,000 commercial apartments, 9,000 of them over 70 square metres in size.
Nguyen Van Luc, deputy director of the Dat Lanh Real Estate Company, said Circular No 02 offered a “lifeboat” to several housing projects that have been rejected by the market.
The Department of Construction has given permission to the developers of 10 housing projects in HCM City to convert them into low-income housing.
Ten others have applied for permission and it is under consideration.
The Hong Quan Consulting-Trading –Service Real Estate Company is among those to receive permission to convert.
The 1,100 commercial apartments in its Sovrano Plaza project on Nguyen Van Linh Road will now become 1,858 low-income apartments with an average area of 55 square metres.
Ninety per cent of the apartments have been booked, the company said.
Not easy
But the conversion to low-cost housing would not be easy in many cases, analysts pointed out.
Chau of HoREA said it would be easy at projects that are not yet built. But it would be very difficult at projects where apartments are already built or are being built and would involve high costs, he said.
Vu Ngoc Dam of the Ha Noi Department of Construction agreed, saying that his agency has approved three conversions — Trung Van project in Tu Liem District, Do Thi Song Da in Ha Dong District, and AZ Thang Long.
But to date only Do Thi Song Da has managed to come up with a new design that has been approved, Dam said.
“To redesign a commercial housing project to make it meet the requirements of social housing will mean spending a great deal of money on technical and social infrastructure,” he said.
“So, not all developers can do it immediately.”
(VNS)
