Abandoned resettlement apartments huge waste of resources: Vietnam realtor association

Tens of thousands of resettlement apartments lie abandoned for various reasons including inconvenient location and poor construction quality, wasting millions of dollars from the state budget every year, realtors say.

The wastage of resources is particularly galling in the context of housing demand constantly increasing and supply seriously declining, says a report by the Vietnam Association of Realtors (VARS).

In big cities like Hanoi, Ho Chi Minh City and Danang, abandoned resettlement apartments have become common. Many resettlement areas have very low occupancy rates and some buildings are even uninhabited completely, the report says.

Large-scale buildings, which cost trillions of VND (VND1 trillion = $39.3 million) in investment, have been abandoned or ineffectively used, seriously degrading the entire infrastructure system, it adds.

It estimates that in Hanoi and Ho Chi Minh City, there are at least 18,000 abandoned resettlement apartments on which hundreds of billions of VND (VND100 billion = $3.93 million) are wasted on maintenance each year.

A Hanoi People's Committee report shows that the capital city has 174 resettlement housing areas in use with a total of more than 14,200 apartments, of which about 4,000 are abandoned.

In many resettlement areas with residents, service business areas have remained vacant for many years.

Meanwhile, the southern economic hub of HCMC has more than 14,000 vacant resettlement apartments, mainly in the Binh Khanh resettlement area in Thu Duc city (formerly District 2) with over 12,000 apartments; and the Vinh Loc B resettlement area in Binh Chanh district accounting for the remaining 2,000, per the municipal Department of Construction.

The VARS report says that housing supply, especially the apartment segment, has been seriously declining since 2018. The number of newly approved real estate projects has become increasingly scarce while ongoing projects are struggling with legal and financial problems. On average, each urban area is estimated to lack at least 50,000 apartments each year.

‘Unreasonable’ situation

The fact that tens of thousands of apartments are deserted while many people are homeless is an “unreasonable” situation, the association says, attributing it mainly to many resettlement areas being located far away from downtown areas with insufficient utilities and public services.

Besides, several resettlement projects have shown problems relating to construction quality, including poor quality materials and substandard design and construction. These problems not only affect the safety of residents but also reduce the value of apartments, making people reluctant to live there, the VARS report asserts.

It reemphasizes that many resettlement areas lack basic infrastructure and conveniences including schools, hospitals, markets, and transportation systems, lowering the quality of life and convenience for residents.

To make things even worse, unsatisfactory compensation and unreasonable resettlement policies under the current Land Law have made many people hesitant to move to new places and/or unable to afford a resettlement apartment.

Resurrecting resettlement apartments

Promptly resolving the problem of having tens of thousands of resettlement apartments abandoned will deliver several benefits, the VARS report says.

The benefits include effective use of land resources, improved supply, better quality of life for dwellers and promotion of sustainable urban development.

For this, “it is necessary to synchronously implement a series of specific measures,” the report suggests.

Firstly, state management agencies need to have clearer and more reasonable planning schemes when choosing locations for resettlement areas. These areas should be well connected to the city center and have adequate infrastructure and public services like schools, hospitals, markets, and other amenities.

Secondly, there should be an agency that closely monitors the construction process. Resettlement projects need to strictly comply with construction standards to ensure quality and safety.

Thirdly, it is necessary to advance the effective date of the new Land Law with regulations on compensation and resettlement support to ensure the rights of people whose land has been reclaimed. A mechanism should be mapped out to ensure fairness for those whose land has been taken by the state, including financial support, counseling and vocational training programs to help the displaced adapt to new lives.

Fourthly, it is necessary to encourage people to participate in the planning and development process of resettlement projects to ensure that they meet actual needs and achieve community consensus.

The government needs to quickly review ongoing resettlement apartment projects and implement solutions to remove difficulties so as to speed up implementation of sluggish ones.

For completed and unused projects that are to be auctioned for capital recovery, concerned authorities should come up with more suitable prices.

Besides auctions, the state can combine resettlement and social housing in the same segment. This will allow resettlement projects to access capital at preferential interest rates from the VND120 trillion ($4.71 billion) credit package.

This capital can be used to complete technical and social infrastructure components similar to that of other housing projects in order to attract residents. Developers can be given a certain percentage of the project's housing fund for commercial businesses, so that they can recover their investment.

Renting can be another effective solution, the report recommends, adding that the state needs to have clear and uniform regulations on renting resettlement houses, ensuring the interests of both landlords and tenants. These regulations must include the amount of rent, rental terms, and other specific conditions.

The report stresses the need to improve management and maintenance of resettlement areas as also invest in upgrading infrastructure and public utilities so that people are motivated to live there. Incentives and financial support including tax exemptions, credit support and other subsidies can also be offered to people renting resettlement houses.