Vietnamese Developer: Social Housing for Rent Needs 15-20 Years to Break Even

Truong Anh Tuan, Chairman of Hoang Quan Real Estate, believes that developing social housing for rent in Vietnam faces significant hurdles, primarily concerning capital and profitability. He stated that banks typically offer loans for a maximum of five years, often closer to two, forcing developers to sell units quickly to repay debts. This short repayment cycle is incompatible with the long-term nature of rental housing projects.

Tuan explained that projects focused on rental housing require 15 to 20 years to break even. Compounding the issue, bank loan interest rates are often considerably higher than the returns generated from rental income. He provided an example where a house valued at 1 billion dong could incur monthly loan interest of 10 million dong, while rental income might only be 5 million dong, resulting in a guaranteed loss for the developer.

“

Banks usually only lend a maximum of 5 years, in reality often only 2 years, forcing businesses to sell immediately after construction to repay debt. Meanwhile, rental housing projects require 15 to 20 years to recover capital.

However, Tuan expressed optimism that these difficulties could be overcome if loan terms are extended and interest rates are reduced for the social housing rental segment. Hoang Quan is proceeding with plans to convert two buildings at its Golden City project in Tay Ninh into social housing for rent. The company aims to contribute to the national goal of building 50,000 social housing units by 2030, having already completed 12,000 units.

Addressing concerns about the company's low stock price, Tuan acknowledged that it reflects the business's current financial health. Hoang Quan is implementing a new management strategy prioritizing cash flow, profit, and scale to increase the stock price to its par value of 10,000 dong and potentially pay dividends. In 2025, the company achieved 147.4 billion dong in revenue and 70.2 billion dong in after-tax profit, exceeding its plan by 100%. Hoang Quan also increased its charter capital to 6.266 trillion dong by issuing 50 million shares to convert debt.

“

A house worth 1 billion dong might have to pay 10 million dong in loan interest per month, but can only be rented out for 5 million dong per month, leading to a guaranteed loss for the business.