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|Hanoi has more than 1,500 old apartment buildings. - Photo dantri.com.vn|
One of the main issues is that the time it takes to rebuild an apartment building is variable, and consequently has a large impact on payback.
After more than 10 years of implementing a plan to rebuild old apartment buildings in Hanoi, only 20 have been renovated, accounting for just 1 per cent of the total in the capital. The city needed a lot of time to fulfill the plan, according to Hanoi's Department of Construction.
Experts said there were also problems with reaching compensation agreements with residents of old apartment buildings, causing delays.
Dao Ngoc Nghiem, vice chairman of the Viet Nam Urban Planning and Development Association and former director of Hanoi's Department of Planning and Architecture, said it was difficult to ensure the interests of all parties including residents and enterprises.
In addition, there were still many problems related to the implementation of those projects, according to Nguyen Van Dinh, deputy chairman of the Viet Nam Association of Real Estate Brokers.
Hanoi' Department of Construction reported the city had more than 1,500 old apartment buildings, most of which were 40-50 years old located in central business districts such as Kim Lien, Trung Tu, Phuong Mai, Thanh Cong and Giang Vo.
The buildings had infrastructure and services in place, but had degraded over the years.
In response, the State has issued a policy to rebuild those buildings to improve living conditions for residents.
According to the Viet Nam Association of Real Estate Brokers, a number of investors are buying old apartments and waiting for opportunities to rebuild them to sell or lease for higher prices.
This has led to old apartment buildings becoming a hot segment in the domestic property market.
A 50-sq.m apartment on Hang Voi Street is on offer for VND70 million per sq.m, while a 40-sq.m old apartment in Giang Vo is going for 57.5 million per sq.m.
Prices fluctuate between VND40 million and VND60 million per sq.m for old apartment buildings in Dong Da District, such as Trung Tu and Phuong Mai.
This meant the price is the same as a new mid-end apartment in inner-city areas such as Tay Ho, Hoang Mai and Ha Dong, or luxury apartments on the outskirts of Hanoi, the association said.
A property broker said the higher prices of old apartments was due to their locations near schools, hospitals, markets and shopping centres.
The price of an old apartment on Hang Bong Street in the Old Quarter even stands at VND120 million per sq.m, more expensive than luxury apartments in other areas.