The building with the highest handover rate has 58 occupied apartments, while the lowest has just 10. 

At 7 pm, like other apartment complexes, the commercial housing complex for resettlement in X2 area is lit up. However, the lights were only flickering at a few apartments, scattered across three buildings, while the remaining apartments were shrouded in darkness.

This commercial housing project was built to order, serving the resettlement. It was expected that all the 750 apartments would be purchased by Hanoi authorities.

A project official stated that since its acceptance in 2020, only 81 apartments have been sold in the last five years. Fifty-eight apartments of CT1 building,13 of CT2, and 10 of CT3 have been handed over.

Hundreds of apartments remain vacant, unlit at night. The X2 area commercial housing project for resettlement in Hoang Mai District, Hanoi, with 750 apartments, has only about 80 occupied units five years after completion.

Hundreds of apartments left idle, investors ‘trapped’

Located along the To Lich River in Dai Kim Ward, Hoang Mai District, Hanoi, the X2 commercial housing project for resettlement comprises three 28-story towers (CT1, CT2, CT3) with three basements. 

In 2018, the Hanoi Department of Construction and the Ministry of Defense’s Urban and Housing Development Investment Corporation (MHDI) signed a business contract for the development of a commercial housing project for resettlement in Hanoi.

MHDI was ordered to create a housing fund for sale to resettlement beneficiaries. The initial investment was VND1,300 billion, with Hanoi set to purchase all 750 apartments.

The contract stipulated that if the city did not allocate resettlement or purchase the apartments within 12 months since the day the construction work could meet resettlement conditions, MHDI would have the right to sell them commercially.

In January 2019, Hanoi People’s Committee adjusted the project’s investment policy, raising the total investment to over VND1,600 billion. The commercial sale of the resettlement apartments was set to begin nine months after the project was deemed usable, if apartments remained unallocated or unaccepted.

In September 2020, all three buildings got official acceptance of work from the Ministry of Construction, eligible for use.

Hanoi allocated 747 out of the 750 apartments for resettlement in citywide land clearance projects. However, since the acceptance moment, only 81 apartments have been sold, with 77 occupied sporadically across the three buildings. There is one floor with only 10 occupied apartments. 

Over the last five years, while residents lack accommodations, billions of VND and hundreds of apartments in this resettlement project remain unused. 

Meanwhile, the investor struggled due to the Covid-19 outbreak and a sluggish real estate market, leading to mounting project debts and high loan interest.

A project official revealed that to meet the approved timeline, the investor had to mortgage the project for a VND800 billion loan. The loan interest has been taken into financial costs, resulting in losses of hundreds of billion of dong.

Proposals

Given this situation, MHDI has repeatedly requested permission to sell the apartments commercially, as per the original economic contract, to recover debts and repay loans.

Under the contract, the investor could sell the housing stock commercially from June 18, 2021.

However, hundreds of apartments remain unallocated for resettlement and unsold, while MHDI has not been permitted to sell commercially.

In response to the investor’s proposal, the Hanoi Department of Construction sent a document to the city’s People’s Committee, reporting that resettlement housing fund created from commercial projects under procurement mechanism is the primary source for land clearance projects in Hanoi, especially key projects in 2021-2025 (accounting for about 80 percent of total resettlement housing).

Therefore, if allowing the investor to sell the apartments in the market after 9-12 months (in case the city does not purchase) could pose legal risks and lead to a shortage of resettlement housing for land clearance projects.

Besides the X2 project, Hanoi has 13 other commercial housing projects for resettlement under procurement mechanisms.

According to the Department of Construction, four projects are complete, ready for use, and purchase contracts have been signed with investors. The estimated cost to buy back the housing stock in these four projects is VND2,892 billion.

To alleviate investors’ financial difficulties and avoid legal risks if resettlement housing is sold commercially, the Department of Construction proposed that Hanoi’s People’s Committee task the Department of Finance with urgently finalizing a capital allocation plan. This would support the policy of buying back commercial housing in eight pilot procurement projects, including X2, ensuring sufficient resettlement housing for land clearance projects and minimizing litigation risks.

Hong Khanh