By Nhu Ngoc in HCMC
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| An old apartment building is seen on Tan Phuoc Street in HCMC’s District 11 - Photo: Dinh Dung |
Old condos that need dismantling and building anew are on target of property developers given their prime locations and available infrastructure, but site clearance and compensation are posing great challenges for investors.
Full of potentials
Renovation of old apartment buildings has been brought forward by the authorities of big cities like Hanoi and HCMC for the past couple of years in a bid to bring a new face to urban areas and ensure safety for residents in deteriorating structures.
According to the Ministry of Construction, there are over three million square meters of condos developed before 1991 nationwide, where 100,000 households are living, including 200 crumbling apartment blocks in Hanoi and HCMC.
Specifically, there are around 100 old apartment buildings in HCMC, with several degraded ones that only meet 40-50% of the quality standards and even could collapse at any time. Therefore, the city has set a plan to replace the expired buildings, mostly in districts 1, 3, 5, 10 and Binh Thanh.
To accelerate the program to renovate old apartment buildings, the Government in 2007 issued a resolution with supporting policies for investors. One year later, HCMC released a decision on assisting investors in compensation and resettlement for households living in the run-down apartments.
In particular, investors using non-state capital will enjoy land use fee and land rental exemptions, and receive tax incentives and preferential loans from housing development investment funds.
In the scheme for the HCMC property market development currently deployed by the municipal construction department, the demand for replacing deteriorated condo buildings is said to be increasing in the next five years when the city continues to relocate, dismantle and build anew 30 old apartment buildings, with the floor space of some 361,000 square meters.
Theoretically, investors will enjoy the advantages offered by the State when investing in the land plots with old apartment buildings. Moreover, they will gain benefits from the ideal locations of these buildings, such as technical infrastructure like traffic, power and water, and social infrastructure like schools and hospitals.
However, investors in old condo renovation projects find it far from a simple task as reality shows that such projects are moving at a slow pace.
… and challenges
Site clearance is a big headache for investors as it is such a great challenge to persuade residents in degraded condos to relocate.
A senior executive from a real estate company said her firm is entering a tough battle to negotiate site clearance compensation for a project to rebuild the apartment section of a land plot covering 4,000 square meters in Tan Binh District.
Apart from some villas, the land plot consists of a four-storey apartment building developed before 1975, which has severely deteriorated. Around 60 households are living in the building, with some apartments only covering 15-20 square meters each.
The renovation project will turn the apartment building into an 18-story building with six floors for commercial use and the remainder for residential purpose with high-grade condos. The project was originally expected to get going this August but the developer is forced to delay execution until next year since the compensation unit prices have yet to be approved by the district authority.
In comparison with urban development projects, old condo renovation projects are under greater pressure because the projects will be revoked if they fail to get going one year after the investors are awarded the projects. In addition, investors are responsible for any incident occurring during the process of site clearance and compensation, said the source.
Compensation is a complicated problem at an apartment building complex on Co Giang Street in HCMC’s District 1. After four years, the complaints about compensation prices have yet to be satisfactorily resolved, whereas the building is currently at risk of collapse.
The building complex comprises four five-story apartment blocks and two rows of street houses, where a total of 885 households are living. The municipal authority had called for urgent relocation prior to April 30 last year in order to dismantle the four apartment blocks.
A new apartment building with commercial space named Pavilon Square will be developed in place of the old one. The project worth some VND1.3 trillion will be invested by Dat Viet Company.
The Saigon Times Daily