More and more high-sky building is rising in Ha Noi. — Photo La Anh

HA NOI (Biz Hub)— The city government has proposed that the number of storeys of old apartment buildings scheduled for renovation be increased to attract more tenants and ensure profits for investors.

The proposal comes amidst a slowdown in the renovation of degraded old apartment buildings in major cities due to the lack of consensus among investors, residents and the government.

Figures from the Ministry of Construction showed that nearly 1,690 apartment buildings, mostly located here and in HCM City, needed upgrading. In the capital city, where the problem is at its worst nationwide, only 14 of nearly 1,000 degraded apartment buildings were rebuilt after 10 years.

A massive effort is needed to meet the goal, contained in the National Government's Resolution 34 and the City Government's Decision 48, of renovating all degraded apartment buildings by 2015.

Trinh Dinh Dung, the Minister of Construction, said the renovation of degraded buildings was the shared responsibility of both the government and the residents.

Projects for the renovation of degraded old apartment buildings tend to repel investors, who fear the risk of huge financial loss.

Under Resolution 34 and the Decision 48, investors are provided with support for infrastructure investment and land use fee incentives, but from the investors' viewpoint, the risk of losing money still outweighs the opportunity to make money under this scheme.

Pham Quy Tien, Deputy Director of the Municipal Department of Finance, cited the renovation project for Nguyen Cong Tru collective zone's N3 building as an example. The project required an investment of VND503 billion (US$23.7 million), but the residents were able to raise only VND200 billion ($9.4 million).

Nguyen The Thao, Chairman of Ha Noi People's Committee, said that it would cost the city around VND1.8 trillion ($84.9 million) to develop infrastructure for the renovation of the entire Nguyen Cong Tru collective zone.

According to the master plan for the capital city, which the Prime Minister has approved, population density in the core urban area would be reduced from 1.2 million to 800,000 people per square kilometre.

This has made the renovation of degraded apartment buildings difficult, as the process must ensure that investors end up making money and residents end up with their own homes. This cannot happen if the number of storeys of these buildings remains limited.

Experts say that the most important factor for the success of renovation projects for degraded old apartment buildings is the harmonisation of benefits for residents and investors with government targets.

Thao said that an increase in the number of storeys of degraded old apartment buildings, coupled with the development of relocation areas that would attract residents, would solve the problem. — VNS