Cushman & Wakefield released the Vietnam Social Housing 2023 report recently, which showed that Vietnam’s urbanization rate increased from 20 per cent in 1993 to 41.7 per cent in 2022, with housing prices now about 20 times average annual per capita income, making it increasingly difficult for a Vietnamese individual to achieve home-ownership. This presents a need for balancing measures, especially the development of more social housing as an instrument to ensure social security and promote sustainability in the real estate market.

The Vietnamese Government has taken initiatives to realize the target and help people improve their quality of life through allocating resources to build 1 million social housing units for factory workers, a $5 billion credit package for the development of social housing projects and worker housing projects, amendments to the Law on Housing 2014 to add more open policies and attractive incentives, and other related policies to promote social housing development.

As of the first quarter of 2023, Vietnam had completed 301 social housing projects in urban areas and worker housing projects at industrial parks, with a total of nearly 156,000 units. There are some 401 projects about to be built, with a total of about 454,000 units.

However, this will still not fully satisfy demand for this type of housing. According to a survey by the Ministry of Construction, demand for social housing among low-income workers at industrial parks is about 2.4 million units in the 2021-2030 period. Both completed and pipeline supply will meet only about 20-30 per cent, however.

The main factors influencing the construction of social housing in Vietnam include the legal framework and policies, public-private partnerships, investment and finance, technological improvements, infrastructure and public amenities, sustainability, and effective design and construction.

There are two common types of social housing in Vietnam: apartments and houses attached to land. Social housing is classified as a priority real estate group, so not all people can buy and own social housing, as units are geared towards lower-income households to ensure social security and towards workers at industrial parks and groups of people with meritorious service during wartime.

The majority of social housing projects are developed by domestic developers, including HUD Vietnam, BIC Vietnam, and Him Lam in the northern region; Xuan Phu Hai, Saigon Invest Group, and Vicoland in the central region; and Nam Long, Hoang Quan, and Sacomreal in the southern region, among many others.

Compared to social housing in Hong Kong (China), Singapore, and South Korea, social housing in Vietnam includes landed houses due to the abundant availability of land. However, the Vietnamese market still lacks specific regulations regarding the ratio of public / private housing in overall housing supply and relies on project developers for design and construction. This creates various options and configurations to cater to different purposes and needs, but does not effectively minimize development costs. Developers of social housing in Vietnam also have to go through lengthy administrative procedures and profit margins are limited to 10 per cent or lower, which makes social housing development more difficult.