In August 2008 Hanoi expanded by 3.5 times with the merger of the former Ha Tay Province, Me Linh District in Vinh Phuc Province and four communes in Hoa Binh Province.
The expansion brought a lot of land on which to develop housing.
Nguyen Hoai An, director of research and consulting at real estate consultancy CBRE Hanoi, says: "In 2008 the starting point of the Lang - Hoa Lac route had only one tall building, a 15-story one. Now that building cannot be seen because it is overshadowed by buildings with 40-50 floors."
Her statement illustrates how the market has change in the last 15 years.
Before 2008 most Hanoians lived in independent houses rather than apartments.
There were just a few urban areas like Linh Dam, Trung Hoa - Nhan Chinh, My Dinh - Me Tri, and The Manor.
But immediately after the expansion a new urban model took shape with a series of modern urban areas being built.
In the city’s west are My Dinh, Xuan Phuong (Nam Tu Liem District), Mo Lao and Van Quan (Ha Dong), and Geleximco (Hoai Duc).
The eastern urban areas include Viet Hung and Vinhomes Riverside (Long Bien).
The south has Linh Dam and Gamuda (Hoang Mai) and the north, Ciputra, Tay Ho Tay (Tay Ho).
Areas once considered remote such as Hoai Duc currently have a number of projects stretching over hundreds of hectares and attracting tens of thousands of residents.
While office buildings were once concentrated in Hoan Kiem District, now they are mainly in the districts of Cau Giay and Nam Tu Liem.
Real estate developments are also taking shape in the north and east.
Tran Ngoc Chinh, president of the Vietnam Urban Planning and Development Association, says Hanoi’s expansion has created more favorable
conditions for economic and infrastructure development and helped distribute its population more evenly.
After the city expanded, its center has become considerably larger. Many large investors have built a series of high-rise, low-rise and office buildings in the enlarged center, not just in the original one.
According to a CBRE executive, the "center of Hanoi" no longer comprises just districts like Hoan Kiem, Ba Dinh and the old inner-city districts, but has expanded to Ring Road No. 3 and districts like Cau Giay, Bac Tu Liem, Nam Tu Liem, Thanh Xuan, and Tay Ho.
The property market has also changed in terms of participants.
Before 2008 developers were mainly state-owned enterprises that were formerly construction companies.
Since then private investors of various sizes and kinds, including newly established firms, have entered the market.
For a period this caused strong volatility in supply and prices in both the apartment and townhouse segments.
The total housing supply in urban areas increased by nearly 6.7 times against 2008 to 396,000 units as of June 2023.
A Hanoi population report expected the capital’s population to reach 7.5 million in 2020, but right now, the population of Hanoi has already reached 8.5 million.
Vu Cuong Quyet, general director of the Northern Green Land Real Estate and Services Joint Stock Company, says until 2010 the real estate market had remained "simple" in terms of both supply and transaction methods.
After the expansion the market made a chaotic transaction, with buyers and sellers uninterested in legal issues, sales conditions or infrastructure, he said.
But things have changed greatly since, with the market becoming more transparent and professional as droves of local and international developers and investors made an entry.
Recently the city has seen many well-planned mega housing projects similar to those in developed countries.
The west of the city, which expanded the most, has seen the biggest increase in apartment supply.
According to CBRE, the number of apartments in districts here like Thanh Xuan, Cau Giay, Nam Tu Liem, Bac Tu Liem, and Ha Dong has surged by five times since 2008 to 184,000 as of June 2023, or 53% of the city’s total number.
But in many other areas too supply has grown exponentially.
Developments have become prolific in the east recently.
Prices have risen the fastest since 2008 in Ha Dong and Long Bien districts.
In Long Bien, apartments used to cost an average of VND11 million (US$466) per square meter, and have now skyrocketed to VND28 million, a 155% increase.
In Ha Dong, they have doubled to VND28 million.
CBRE estimates that the average price in the city’ secondary market has increased by nearly 57% to VND33 million.
Townhouses also follow trend
Construction of houses too has witnessed a strong shift to the west of the city.
By the end of June 2023 a total of 16,000 houses had been built in five urban districts in the west, twice the number 15 years earlier.
If the five rural districts in the west are also taken into account, the supply of houses has increased six-fold.
The west accounts for 62% of Hanoi’s houses.
The average prices of townhouses in the secondary market have risen by 175% since 2008 to VND154 million per square meter.
Amid a mushrooming of low-rise housing in the east in the last five years, Gia Lam has seen the fastest price rise: of 916%.
If in 2008 the average price there was around VND12 million, it is now VND122 million.
In Long Bien, prices in the second quarter of 2023 were around VND145 million per square meter, a 340% increase from 15 years ago.
Three districts where prices top VND200 million are Cau Giay (VND260 million), Tay Ho (VND233 million) and Hai Ba Trung (VND209 million).
In Nam Tu Liem and Bac Tu Liem they are close to VND190 million.
Urban areas on paper, paddy fields in reality
Hanoi’s real estate market experienced unprecedented growth right before the city’s expansion, according to real estate consultancy Savills.
Local authorities approved many property projects in areas slated for merger with Hanoi such as former Ha Tay Province and Me Linh District in Vinh Phuc Province.
Projects spread over dozens to hundreds of hectares, mostly comprising townhouses or land plots, were launched despite unfinished infrastructure and legal procedures.
Buyers took a risk by signing capital contribution contracts and paying for townhouses even before they were built.
Prices soared to new levels soon after launch. At some places, prices changed several times in a single day.
The Splendora Bac An Khanh project, now renamed Mailand Hanoi City, soared to a record high for the western region.
When launched, villas there had a capital contribution contract for VND39 million per square meter (then $2,000).
Thus a villa of 270 square meters cost some VND10 billion, but their market price quickly jumped to VND22-25 billion, even VND32 billion in some cases.
At other projects in the west such as Vuon Cam, Van Canh and Nam An Khanh urban areas, townhouse prices appreciated by VND1-3 billion.
This price difference was usually paid without a contract, but back then no one cared worried about such risks.
Then, a few years later people had to file complaints or lawsuits to claim lands and townhouses they had paid for at certain projects.
The situation was similar in Me Linh District, where most property projects were approved right before the merger took place in August 2008.
According to its Department of Natural Resources and Environment, 18 were approved in just one month before the merger.
But now, 15 years later, the real estate market in the west is a mixed bag. It has some high-class residential communities such as Mailand
Hanoi City, Vinhomes Thang Long and Vinhomes Smart City, but many other projects never got off the ground or have been completed but only 20-30%
occupied due to legal, capital and infrastructure issues.
At most of the unfinished projects, cattle can be seen grazing. Others are overrun by weeds.
But nothing compares with Me Linh, where most of the 2,000-odd hectares are still paddy fields or flower gardens. Some projects are still waiting for the government’s green light.
As of the middle of this year, 32 projects approved in July 2008 are among 135 that have yet to be allocated land, according to the city People’s Committee.
Most of the 32 are expected to go on the chopping block, including 18 in Me Linh alone.
Experts reckon that the Hanoi real estate market has matured considerably.
Trading conditions are gradually becoming stricter, legal information is more transparent and customers are increasingly savvy.
But according to Chinh of the Vietnam Urban Planning and Development Association, other urban areas remain unoccupied because developers were only interested in quick sales and big profits and not on quality or facilities such as schools and parking lots.
So future planning should invariably factor in construction density, population and transport infrastructure to improve connectivity with the city center, he says.
Quyet of the Northern Green Land Real Estate says connectivity infrastructure and utilities have not kept pace with housing development, causing many villas to remain unoccupied.
Pham Duc Toan, founder of real estate firm EZ Property, says urban projects approved more than a decade ago still face legal problems that are unlikely to be solved in the next few years.
According to the experts, the lopsided nature of the primary market is another problem that has persisted for more than a decade.
The high-end segment always accounts for a large proportion of the market, making it difficult for middle-income people to buy housing.
A study by U.S. technology company Enova International’s platform NetCredit puts Hanoi among the group of the most difficult capitals in the world in which to buy a home.
CBRE calculates that a worker relying on their income alone has to spend nearly 15 years’ income to buy a 50-square-meter apartment and nearly 100 years’ income to buy a 75-sq-m townhouse.
Savills says housing prices are growing at more than twice the rate of average income.
In the event, the consultancy says, people have to pay even more years’ incomes to buy housing.
Story by Nguyen Ha, Anh Tu, Ngoc Diem
Graphics by Hoang Khanh, Thanh Ha
