Why do thousands of resettlement apartments remain unoccupied?

Le Thi Lien, 62, and her family of five had lived for decades in a 12-square-meter house deep in an alley on Hang Chieu Street in Hanoi’s Hoan Kiem District before they were told to relocate as part of the city’s plan to reduce population density in the downtown area.

Lien said her family did not want to move to the resettlement area in Long Bien District’s Thuong Thanh Ward since it was a long distance away from their old house.

"Moving seven kilometers away is very inconvenient, so none of us wanted to live in the resettlement unit."

Similarly, Tran Huu Son, 56, and his family in HCMC’s District 6 had to hand over their land to the state for the Tan Hoa - Lo Gom canal sanitation project in 2012.

He was offered either cash or an apartment in the Vinh Loc B resettlement area project in Binh Chanh District, 12 kilometers away from his old house.

Though the cash was not enough to buy a new apartment, Son chose it anyway as "the resettlement area was too far away and would affect the family's livelihood."

He said most people who accepted the resettlement units quickly sold them to move away, with few choosing to stay there long-term.

The resettlement areas are two of the numerous abandoned ones in Hanoi and HCMC.

The cities currently have nearly 13,000 vacant resettlement apartments.

Of these, nearly 9,000 units are in HCMC, with the Binh Khanh resettlement area in Thu Duc City accounting for more than half of them and the Vinh Loc B project for nearly a quarter, according to the city Department of Construction.

The Vinh Loc B resettlement area in HCMC's Binh Chanh District in June 2024. It has 1,900 apartments, 80% of which are unoccupied. Photo by VnExpress/Thanh Tung

Resettlement apartments are provided as compensation by the government when it acquires land from the public for infrastructure and other works.

In places like Hanoi and HCMC, where housing supply falls short of demand, thousands of unoccupied apartments represent an egregious and massive waste of resources.

The main reason, as experts point out, are flaws in land clearance compensation policies, planning that does not align with residents’ needs and rapid deterioration of infrastructure due to poor construction.

Individuals who get resettlement housing in return for their land have to pay infrastructure fees that can run into hundreds of millions of dong (VND100 million = US$3,933.4) in some areas, according to Le Hoang Chau, chairman of the HCMC Real Estate Association.

An executive at a property development company in Hanoi said, furthermore, the value of a resettlement apartment is usually lower than the market value of the property taken over by the government.

"This often causes people to choose cash, leaving many resettlement buildings unoccupied."

The resettlement areas are also not planned with residents’ needs in mind.

Architect Dao Ngoc Nghiem, vice chairman of the Vietnam Urban Planning and Development Association, said most are located far from the city center or where the vacated lands are situated.

He cited the example of the resettlement area in Hanoi’s Long Bien District built as compensation for those relocated from the Old Quarter.

"The area is large, but it provides no opportunity for residents to start businesses or earn some income. Whereas, back in the Old Quarter, they can earn tens of millions of dong per month despite living in a small house of just a few square meters."

He said, when developing resettlement projects, authorities and developers often fail to find out the opinions and needs of those whose lands are acquired.

Instead, officials simply "notify them to move to the new sites."

This usually means the new projects only provide housing and nothing else in terms of access to food and jobs, cultural environment, utilities, and infrastructure, he said.

A corner of the Tran Phu resettlement area in Hanoi's Hoang Mai District in June 2024. Photo by VnExpress/Ngoc Diem

Nguyen Van Dinh, president of the Vietnam Association of Realtors, said poor construction quality and lack of basic amenities also contribute to people’s indifference towards resettlement houses.

Many resettlement projects suffer from the use of inferior materials, improper designs, substandard construction, and lack of maintenance funds, he said.

So they often deteriorate greatly within a few years, lowering their value and threatening the safety of occupants, he said.

A representative of the agency in charge of many of the resettlement buildings in Hanoi said many have deteriorated severely with peeling walls, water leakages, cracked floors, and malfunctioning elevators.

One of the reasons for this is the low monthly management fees, which have remained unchanged for the past 15 years at around VND30,000 per apartment.

This leads to insufficient funds for basic maintenance and repairs.

Nghiem said many resettlement areas are built in "the middle of nowhere," where even basic amenities such as schools, hospitals and markets are lacking.

Lien said she had considered moving from her cramped house in the Old Quarter to the more spacious and upscale resettlement apartment she was provided.

But she changed her mind immediately after visiting the place.

"The apartments there are severely deteriorating. They lack residents and have limited amenities, making the living environment there no better than my cramped house in the Old Quarter."

Prime Minister Pham Minh Chinh has instructed the Ministry of Construction to study the possibility of converting the unused resettlement apartments into social housing.

This is expected to boost social housing supply while also addressing the issue of unoccupied resettlement housing.