The lowest price for apartments at CT1 Ngo Thi Nham apartment bloc, reserved for low income earners, is 8.8 million dong per square metre. Poverty experts assert that the price is too high for low income earners.

Selling dear to poor people?

Some real estate experts say that the apartments sold to low income earners should be priced at 4-5 million dong per square metre. Since project investors can enjoy land leasing fee exemptions, they would still gain huge profits selling at just 5 million dong per square metre.

Nguyen Van Toan, a contractor, admitted that people have the wrong idea about these apartments. “Apartments for low income earners” are understood as those with quality a bit lower than high grade apartments.

Many apartment projects targeting low income earners will kick off soon. These include Me Linh Dai Thinh II project developed by HUD Group, which will begin construction in October 2010 and will provide 4000 apartments. Bac An Khanh project in Hoai Duc District is developed by VInaconex and Handic. It will begin in November 2010 and provide 10,000 apartments. There will also be another 515 apartments in Viet Hung Urban Area in Long Bien District.

According to Toan, these buildings should have less than five stories. If higher, construction costs will skyrocket because investors must pay more to ensure their structural integrity. Besides, in multi-story buildings, investors must also install lifts, while residents must pay fees to run the elevators.

Even so, project investors now all tend to build 20 stories or more.

In HCM City, an Era sample apartment has been offered at 8 million dong per square metre. According to Nguyen Duc Thanh, a contractor in HCM City, 8 million dong per square metre is not “cheap.” According to Thanh, if people build villas themselves, they pay around five million dong per square metre.

Thanh admitted that many people wrongly believe that construction material imports help lower construction costs. In fact, imports make the cost much higher, because domestic materials are cheaper.

Also for every apartment at CT1 apartment bloc, a buyer must compete with six other people. People hear that the apartment price is $1000-2000 per square metre, and they wrongly think 8 million dong per square metre is dirt cheap.

Cana cheap apartment be found?

All legal documents released by Hanoi authorities relating to the sale of apartments to low income earners stipulate that only those with incomes lower than the average income of Hanoians are eligible. However, no one has clearly stipulated how much this is.

Many people believe that those who are eligible for low cost housing are people who do not have to pay personal income tax or have incomes lower than five million dong a month. At these prices, however, it is clear that even if they saved money all their lives, they could not afford such homes.

According to the developer of CT1 bloc, people will pay over 600 million dong for a 70 square metre apartment. If a low income earner has the monthly income of four million dong, he will have to save money for 60 years.

Source: VnMedia