In Hanoi, old apartments' prices skyrocket amid shortage

Prices of old apartment buildings, having been delivered to homebuyers four to five years ago in Hanoi, have surged to double or even quadruple their original launch prices.

Real estate experts argue that these inflated prices do not reflect the true market value as few transactions have been made.

They attribute this surge to speculation and market manipulation caused by supply shortages.

   Dramatic price increases

For example, the GPT apartment complex on Pham Van Bach Street in Cau Giay District, operational since 2021, is currently marketed by real estate agents at over VND90 million (US$3,516) per square meter.

Le Van Thien, an employee at HC Real Estate Company, explained, "This unit has three bedrooms, two bathrooms, covers 96 square meters, and the client is asking for VND92 million [$3,594] per square meter."

Thien justified the price by citing its prime location near a busy intersection, mid-level placement within the building, and views directly facing Cau Giay Park, about 500 meters away.

Yet, Thien admitted that only a few years ago, the project initially launched at around VND40-45 million ($1,562-1,758) per square meter.

Similarly, on Trung Kinh Street in Cau Giay District, the CTP apartment complex, operating for nearly a decade, lists prices as high as VND88.5 million ($3,457) per square meter.

An apartment building located along Thang Long Boulevard in Me Tri Ward, Nam Tu Liem District has units listed at VND84 million ($3,281) per square meter despite having been handed over to customers several years ago.

Meanwhile, the ECF apartment complex on To Huu Street in Ha Dong District is offered at VND76.6 million ($2,994) per square meter.

A reporter from Tuoi Tre (Youth) newspaper noted that these standalone apartment projects are not part of larger urban developments, thus they provide limited amenities like green spaces and playgrounds.

Nevertheless, their selling prices have doubled those offered by the project developers.

Remarkably, the MDP Project on Duy Tan Street in Nam Tu Liem District is now advertised at a staggering VND200 million ($7,818) per square meter.

Le Thu Tra, from LS Real Estate Brokerage, remarked, "Just a few months ago, these units were listed at VND170 million [$6,645] per square meter, now they're priced at VND200 million [$7,818] per square meter."

She highlighted that the building includes luxury amenities including a swimming pool, lounge, dining area, and fully-furnished high-end interiors.

The complex began delivering apartments to buyers only in 2020.

   Causes and potential solutions

Professor Dang Hung Vo, an expert in land management, stated that real estate prices typically increase in densely populated, commercially viable areas.

According to Vo, significant price surges occurred historically in phases -- rising approximately 100 percent in 1990-92, another 100 percent in 2000-02, and up to 300 percent in 2007-08.

"In the past year, the apartment segment saw steep price hikes but few transactions were done, indicating that current prices are artificially inflated," Vo observed.

He suggested that some businesses might be intentionally spreading rumors to drive up property values.

"Even in my own complex, I get calls all the time asking if I want to sell or rent. It feels like these callers are hired because whenever I say I'm open to selling, real buyers rarely show up," Vo said.

To curb speculation, Vo proposed a reasonable property tax system that targets vacant homes, rapid flipping, and imposes higher taxes on those who own multiple properties.

"Only an appropriate real estate tax aligned with economic realities can ensure the market's healthy and stable development," he emphasized.

Nguyen The Diep, vice-chairman of the Hanoi Real Estate Club, pointed out that since last year, the supply of new commercial apartments has severely lagged behind demand, causing scarcity.

He explained, "Scarcity naturally breeds speculation, price inflation, and market manipulation."

Regarding acceptable annual price increases, Diep noted that defining a precise percentage is challenging because the market operates based on supply and demand.

"If supply matches demand, prices naturally stabilize. Conversely, limited supply and minimal competition result in monopolistic conditions," Diep elaborated.

Diep advised potential buyers to thoroughly research and cross-reference various sources before committing financially to avoid overpaying.

The Hanoi People's Court recently sentenced six defendants for artificially inflating land prices in Soc Son District, pushing them as high as VND30 billion ($1,172,700) per square meter.

Pham Ngoc Tuan, identified as the ringleader, was handed a three-year prison sentence, while the others received jail terms ranging from 12 to 30 months for violating asset auction regulations.

Quang The - Kim Thoa / Tuoi Tre News

(2025/03/26-18:06)