Underground space emerges as Hanoi’s ‘new growth axis’

As land availability in Hanoi’s urban core becomes increasingly constrained, the Vietnamese capital is beginning to look underground for future expansion rather than continuing the outward urban sprawl that has defined its growth for decades.

For years, Hanoi expanded primarily toward suburban areas amid rapid urbanization and a fast-growing population. But that model is increasingly showing its limits as surface infrastructure within the area inside Ring Road 3 faces mounting pressure, from traffic congestion and parking shortages to a lack of public space and overloaded technical infrastructure.

In central districts such as Hoan Kiem, Ba Dinh, Dong Da and Hai Ba Trung, land reserves for large-scale infrastructure development have become extremely limited. Meanwhile, solutions pursued in recent years, including clearance and surface-level redevelopment, require substantial resources and long implementation periods and may not provide a sustainable long-term answer to urban development challenges.

Against that backdrop, Hanoi’s newly approved master plan with a 100-year vision marks a notable shift in urban planning philosophy by treating underground space as an independent strategic component for the first time.

According to the approved plan, the consulting consortium includes several international firms from China, Singapore and the United States. Among them is the Shanghai Urban Planning and Design Research Institute (SUPDRI), which has participated in numerous high-density urban development projects in Shanghai.

In addition to urban planning specialists, the consortium also includes Boston Consulting Group (BCG), one of the largest U.S. strategy consulting firms. BCG’s participation suggests the plan is not focused solely on construction engineering, but also on urban operations, land-use efficiency and the long-term economic value of underground infrastructure.

Architecture of a “three-dimensional city”

Unlike earlier proposals that remained largely conceptual, Hanoi’s newly approved underground development strategy outlines a relatively clear multi-layered structure, reflecting a shift toward vertical urban expansion rather than surface sprawl.

Under the approved orientation, the 0-15 meter layer will prioritize functions closely tied to daily urban life, including underground parking, pedestrian walkways, commercial centers and technical infrastructure. This is also expected to be the most commercially viable layer due to direct connections with future metro stations and transit-oriented development (TOD) zones.

At depths of 15-30 meters, the city plans to develop underground transport systems, logistics facilities, storage areas, energy infrastructure and disaster prevention works - effectively serving as the “circulatory system” of the city.

Meanwhile, the 30-50 meter layer is earmarked for major technical infrastructure corridors, underground water storage systems and strategic infrastructure projects, while areas deeper than 50 meters are reserved for defense and special long-term infrastructure purposes.

Underground space is also planned according to functional zones rather than through blanket development.

Areas south of the Red River are expected to focus on underground transport routes, tunnel systems and large-scale parking facilities. North of the river, planners envision transfer halls and underground commercial complexes. The Long Bien-Gia Lam corridor is being positioned as a smart underground space integrating logistics and urban data centers.

Meanwhile, the Son Tay-Hoa Lac-Xuan Mai-Phu Xuyen axis is planned as a hub for underground high-tech infrastructure, data facilities and large-scale computing centers.

The master plan also sets out a phased implementation roadmap. Between 2026 and 2035, Hanoi will focus on building the legal framework, management mechanisms and foundational planning for underground space. After 2035, the city aims to accelerate development, with underground construction in central districts expected to account for around 20% of total urban built-up land.

Still, realizing the vision of an “underground city” will not be straightforward. Investment costs for underground infrastructure are typically far higher than for surface projects, while Vietnam’s legal framework governing ownership and exploitation rights below ground level remains incomplete.

In addition, synchronizing metro systems, TOD planning and existing technical infrastructure will likely remain a complex challenge for decades, requiring coordination among multiple stakeholders.

Lessons from major Asian cities

The participation of consulting firms from Shanghai and Singapore has drawn attention because both cities have extensively utilized underground space as part of their urban development strategies.

In Shanghai, metro systems, shopping centers, parking facilities and underground pedestrian networks are interconnected around major financial and commercial districts.

Singapore, meanwhile, has spent years developing underground planning strategies to move logistics hubs, fuel storage, data centers and technical infrastructure below ground, freeing up surface land for housing and green spaces.

A common feature of these models is that underground space is no longer treated merely as supporting infrastructure, but as part of the urban structure capable of generating economic value and improving land-use efficiency.

That is also the direction Hanoi now appears to be pursuing by making underground space a strategic component of its long-term master plan for the first time.

If the metro system is expected to become the “backbone” of future Hanoi, underground space could emerge as a new infrastructure layer enabling the city to expand operational capacity without sacrificing increasingly scarce surface land in the urban core.

Opportunities for private investors

Although the legal framework remains incomplete, several segments are already emerging as potential areas for private-sector participation.

Underground parking in the urban core

This is considered the clearest near-term opportunity as surface land becomes increasingly scarce and traffic pressure intensifies. Once underground planning is further formalized, underground parking projects could become one of the earliest areas for public-private partnership (PPP) implementation.

Underground retail linked to metro and TOD projects

Underground commercial models around metro stations have expanded significantly in cities such as Shanghai, Seoul and Tokyo. As Hanoi’s metro network gradually takes shape and zoning plans around major transit hubs are finalized, new underground retail spaces may emerge.

Data infrastructure and logistics in satellite urban areas

In areas such as Hoa Lac and Long Bien-Gia Lam, plans for underground technical infrastructure, logistics and data centers could create opportunities for investors in technology and digital infrastructure, particularly as Vietnam’s demand for data processing and computing capacity continues to rise.

Surface real estate near underground developments

In cities such as Shanghai and Tokyo, properties located near metro systems and underground infrastructure often see rising values due to improved connectivity and amenities. As a result, surface real estate around metro hubs, TOD zones and underground development areas is increasingly attracting long-term investor interest.