Redevelopment work hits a wall due to a lack of policies

Foreign investors are chafing at the bit to redevelop old buildings

The Ministry of Construction said that a total of more than two million square metres of old apartments, all of which were built before 1980 in Hanoi, Ho Chi Minh City and Haiphong, need to be redeveloped.
Vu Van Hau, director of the Hanoi Department of Natural Resources and Environment, said the city had 23 residential quarters with a floor space of one million sqm which “are seriously deteriorating with technical infrastructure which is destroyed or downgrading critically”.
“A number of housing quarters are in danger of collapsing at any time,” said Hau.
These quarters were built between 1970 and 1980 in Thanh Cong, Giang Vo, Van Chuong, Nguyen Cong Tru and Kim Lien areas. All are low rises of four and five floors.
Hau said by mid-June more than 81,200 apartment units had been sold to private owners and the department and other state agencies were managing another 73,830 units.
A number of old blocks have been redeveloped into modern high-rises but Hau said the city was considering another 77 dilapidated blocks for redevelopment including those in Nguyen Cong Tru, North Thanh Xuan and Van Chuong.
Due to prime locations, developers have set sights on redeveloping deteriorating residential quarters, but none have been able to dismantle any of the structures yet.
Developers say redevelopment of old residential quarters are a complicated issue that still lacks governmental policies and legal frameworks.
Foreign investors have expressed interest to join Hanoi Construction Investment No 2 to rebuild the 5.3 hectare Van Chuong quarter into a modern housing complex. However, the local company is still doing surveys and negotiating with residents over compensation and relocation.
Over the last three years, the Construction Investment and Housing Development No 7 Company has been proceeding with plans to rebuild Nguyen Cong Tru quarter in Hoan Kiem district that features 14 dilapidated blocks with 9,000 residents.
The company said fixed planning was an obstacle for redevelopment. A master plan for Hanoi until 2020, approved by the Prime Minister in 1998, limits new development in downtown areas.
Approved construction density rate in Nguyen Cong Tru is 35 to 40 per cent while current density is already 80 per cent and the population has grown much higher than initial designs.
Hau agreed that investors would make no profits if they had to follow approved development master plans.
“Surveys show that if the population and construction density are fixed as before, investors will not be capable of carrying out projects,” said Hau.
Developers claim residents of the ground floor did not agree to relocate to upper floors if the home is redeveloped. Under the current regulations, the ground floor will be used as public space.
Residents are also asking for high compensation while developers do not have enough properties for resettlement, representing obstacles to relocation for reconstruction.
Construction minister Nguyen Hong Quan said the ministry would propose the government policies for redevelopment.



No. 770/July 17-23, 2006