Hanoi's old apartments turn hot properties

Decaying and old apartments have long been seen as the least preferred option in the local real estate market, mainly due to their old conditions, small size, and inadequate utilities. Such notion, however, has changed recently and subsequently led to 10-20% increases of their value in market prices.

Old apartments are fast becoming hot properties in Hanoi. Photos: Thanh Luan

Nguyen Thanh Dat, a realtor, told The Hanoi Times an old apartment at the G2 block Thanh Cong, Ba Dinh District, was previously valued at over VND1.6 billion (US$70,120), but the price has now risen to over VND2 billion ($88,000).

Another apartment of around 40 square meters at B3 block Giang Vo, Dong Da District, is currently priced at VND2.3 billion ($101,000), a sharp increase from the VND.1.8 billion ($79,000) offered by the owner since early 2021.

Such apartments, often referred to by the property brokerages as the three Nos (no service fee, no fire prevention measures and no legal basis), are turning into hot properties in spite of degradation conditions, thanks  to new compensation and resettlement plans put forth in the Government’s decree No.69/2021/ND-CP,  issued in July, on renovation and reconstruction of apartment buildings.

Phan Manh Hung, another realtor, told The Hanoi Times with such characteristics, buyers are not required to pay any service fees compared to apartments in newly built condominiums.

More importantly, the majority of these old apartments are located in downtown areas or “golden location” in the city’s increasingly limited land funds.

“People looking to buy these apartments would expect to receive a large amount of compensation once the authorities decide to demolish old buildings,” Hung said.

According to Hung, another plus point comes from the fact old apartment is valued at around VND2 billion, an average price range for properties in Hanoi. “Taking into consideration all factors, many are holding high expectation that they would receive greater returns when the old condominiums are set to rebuilt,” Hung added.

Many are looking for old apartments in anticipation of greater returns when they are rebuilt.

Expert Nguyen Huy Quang from Vietnam Audit Valuation and Financial Consulting Company, however, warned people not to spend a large sum of money buying old apartments and waiting for them to be reconstructed.

“The new decree stipulates the upgrade is only applicable to apartment buildings severely damaged by accidents, natural disasters, or failed to serve its intended purpose,” Quang added.

Lawyer Trinh Huu Duc from the Ham Rong Lawyer firm noted the decree also states that owners of resettlement house should pay the difference between the new and the old apartment.

“It is unlikely that investors would be benefited from new  policy in this case,” Duc told The Hanoi Times, “not to mention possible changes to the planning or regulations in the future”, he added.

Moreover, Duc suggested the stock of old apartments in the city is very large, so it means renovation and reconstruction of old condominiums would be a lengthy process. 

Vice Chairman of the Vietnam Urban Planning and Development Association (VUPDA) Dao Ngoc Nghiem added investors looking at this option should take into consideration various factors, including the location, master plan, and expected timeline for reconstruction.

According to experts, the introduction of decree No.69/2021/ND-CP is seen as a major step towards the acceleration of renovation and reconstruction of old apartment buildings, as it defines in detail which types of condominium are subject to rebuilding along with compensation plans and support for resettlement.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA) expected the decree to open a new opportunity for investors to take part in the rebuilding of old condos that local authorities with current budget constraints at the moment are unable to do it alone.

“Hanoi and Ho Chi Minh City are home to many old apartment buildings that are posing serious safety issue for people living insides,” Chau said.

Statistics from the Hanoi Department of Construction noted Hanoi currently has 1,579 old apartment buildings of two to five floors and were built during the 1960-1990 period.

Among those, 25% are at the D category, the most dangerous in the four-scale level. In the past 20 years, Hanoi has been able to renovate only 1% of the total of old apartment buildings.