Housing projects for low-income earners in the northern province of Bac Giang. (Photo: VNA) A survey conducted by the Vietnam General Confederation of Labourreveals that 60% of workers currently rent homes outside of industrial zones,with their monthly rental costs accounting for 30% of their total income.
Nguyen Hong Van, Deputy Director of the Valuation and FinancialAdvisory Department at Savills Vietnam, highlighted the limited supply ofworker housing.
There are approximately 4.5 million workers in industrial zonesacross Vietnam. Half of them require accommodation, with the demand for housingamounting to 12.5 million square metres of floor space.
Despite the considerable demand, the current supply only satisfiesaround 30% of the actual need. Consequently, people have resorted to hostelsnear industrial parks to live. Many of these motels are old, deteriorating, andovercrowded, posing significant health and safety risks to tenants.
Hai Phong city is known as the locomotive of industrialdevelopment in the North. The city is home to 14 operational industrial parks, 26industrial clusters, and over 200,000 employees, including around 50,000migrant workers. The housing options in the area are insufficient to meet theneeds of this workforce.
This locality has devised plans to establish 15 additionalindustrial zones on 6,000 hectares of land. These zones are projected torequire a workforce of up to 300,000 people, resulting in a substantial demandfor worker housing, estimated to be around 1.5 million square metres of floorspace.
In Hai Phong city, the primary form of worker housing is renteddormitories. Van said a survey revealed that workers' housing in Thuy Nguyen district,which encompasses the VSIP Hai Phong Industrial Park and Nam Cau KienIndustrial Park, has an average gross rent ranging from 3.2-4.2 USD per squaremetre per month.
Two notable worker housing projects currently in operation include278 units constructed by LG Display and 330 units developed by Golden PeakCompany in Duong Kinh district. The occupancy rate for worker housing in thisarea consistently remains high, hovering around 95%.
Tran Tuan Anh, deputy head of the Management Board of HanoiIndustrial Parks and Export Processing Zones, said that existing industrialparks, particularly the older ones, were not planned to accommodate workerhousing. The planning, development, and management of worker housing projectshas faced numerous obstacles as they primarily involve technical infrastructureworks.
Despite the growing demand for worker housing, limited andinaccessible capital sources pose significant challenges to the developmentprogramme. The current preferential policies related to capital areinsufficient to incentivise businesses, organisations, and individuals toinvest in worker housing construction.
Furthermore, the project's payback period, ranging from 20 to 30years, exacerbates the difficulties in calling private investment in housingdevelopment.
Van from Savills Vietnam noted that there was previously no legalframework or clear definition for worker housing. However, the recent passingof Decree 33, which focuses on promoting safe, healthy, and sustainabledevelopment in the real estate market, has brought about crucial commitmentsconcerning public and social housing. The development of these housing types isnow incorporated into the general planning of localities and the nation as awhole.
Additionally, the State has introduced various policies toencourage investment in development and support packages for workers to accesshousing products. Specific regulations have been implemented for certainindustrial zones, mandating that at least 2% of the total land area beallocated for worker housing. Proposals have been made to exempt land use taxfor the development of worker housing.
Furthermore, several financial mechanisms are being proposed toassist developers, such as the exemption or reduction of value-added tax andcorporate income tax. Construction costs can also be deducted when calculatingcorporate income tax. Developers can access concessional loans from the Bankfor Social Policies and other credit institutions operating in Vietnam.
Workers themselves can benefit from the Government's VNĐ15trillion credit support package. According to Resolution 33, employees seekingto purchase or rent affordable housing can receive support in the form of a loanwith an interest rate of 2% per year for two years, spanning from 2022 to 2023.
Worker housing and social housing differ primarily in terms oflocation and legality. Social housing can be developed in various locations,whereas worker housing is concentrated in and around industrial zones.
Buyers of social housing receive long-term or 50-year ownershipcertificates (red books) and can transfer the property to eligible individualsonly after at least five years from the termination date of the house purchaseor lease contract.
Worker housing is predominantly designed as rental apartments andis developed by either State-owned or private enterprises. Three entities areauthorised to provide worker housing, including industrial park infrastructuredevelopment enterprises, manufacturing enterprises within industrial parks, andreal estate businesses.
Currently, in the northern provinces, manufacturing enterprises inindustrial zones have provided 70 % of worker apartments.
Worker housing typically comprises low-rise buildings with amaximum height of five floors and lacks elevators. Ground-level parking areas,community living areas, canteens, mini supermarkets, green spaces, andplaygrounds are common supporting facilities.
The rooms in worker housing are divided into two types: singlerooms and household rooms. Single rooms have an average size of about 30-35square metres and can accommodate up to six occupants. Household rooms have anaverage area of 25 square metres and can accommodate a family of four people.
Despite the forthcoming deployment of additional housing projectsfor workers, the demand for this segment remains significantly high and unmet.Savills' price index for the first quarter of 2023 reveals that themanufacturing sector witnessed a notable increase of 482,000 workers comparedto the same period last year, indicating a substantial demand for labour fromearly in the year.
Given the persistent demand in the market, private enterprisesstand to benefit from investing in the worker housing segment. The ongoingdevelopment of the industrial sector, stable inflows of foreign directinvestment (FDI), a productive workforce, and supportive investment policies createfavourable conditions. Consequently, worker housing can emerge as an attractiveniche for development in the near future, Van said./.
VNA
