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Property prices in northern Ha Tay province are soaring as investors bet a new real estate boom isn't far off, writes Ngoc Son. Ha Tay has become hot property in recent months, as Hanoians scoured the four corners of the province over the weekend.

Property prices in the province are sky-rocketing. In Ha Dong city a square metre of land is now sold for up to $4,000, equivalent to prime locations in Hanoi’s My Dinh. Land in the European Viet Kieu Village was sold for $500 a square metre two years ago but now goes for as much as $2,500. Land prices in other areas such as Van Quan, Van Khe and An Khanh have tripled over the last one year.

All the price hikes in Ha Tay are attributed to the imminent expansion of Hanoi’s borders. Buyers are flocking to the province on speculation that Ha Tay will be merged with Hanoi when the capital city expands.

Hanoi seeks room to move

The expansion of Hanoi’s administrative borders was recently given the go-ahead by Prime Minister Nguyen Tan Dung. Hanoi’s new land area will probably triple to cover part of neighbouring provinces such as Ha Tay, Hung Yen, Bac Ninh and Vinh Phuc. Developers are moving to these provinces to build satellite cities in anticipation of rising real estate values when the expansion goes through.

On the border between Hanoi and Hung Yen, Viet Hung Joint Stock Company is building a 500-hectare township while in Bac Ninh other residential townships are being built on areas bordering Hanoi.

The northern part of Hanoi is also attracting developers. However, Phan Truong Son, director of Hop Phu Investment and Development Joint Stock Company, said the development of residential townships in the northern part of Hanoi had slowed as residents would have to cross the Red River to work in the city’s administrative and commercial area. He said residential development in the northern part would depend on the construction of bridges spanning the river. Currently, only three bridges are in operation while two others, the Thanh Tri and Vinh Tuy, are being built.

Doan Van Binh, president of CEO Investment JSC, said the expansion of Hanoi would happen in all four directions but the pace would be slower in the northern, eastern and southern parts as infrastructure is still lacking in the areas.
“I think the expansion of Hanoi toward the western direction that will cover Ha Tay will be the most feasible and happen the most quickly,” said Binh.

Rumours have been swirling that the first area for expansion would be the west of the city along the Lang-Hoa Lac highway. This area is accessible from the city and from the airport and has developed infrastructure and has numerous residential and commercial projects planned.

The completion of the six-lane, 30km highway between Lang and Hoa Lac in 2010 will help. The highway is set to be a major artery in Ha Tay and critical to Hanoi’s spatial expansion. In addition, Ha Tay is next to My Dinh, a new residential and commercial centre of Hanoi with numerous residential, hotel and office buildings now under construction.

Ha Tay is also developing a modern transport system to link with the capital city. Local authorities recently allowed Nam Cuong Group to break ground on a boulevard linking the extended Le Van Luong street of Hanoi with Ring Road No.4.

Another avenue in the pipeline stretches 4km from My Dinh to Ring Road No.4. But the jewel in the crown of transportation development is the 50km North-South Road axis from Son Tay town to National Highway 1A. Nam Cuong Group is negotiating with local authorities to build the road under the build-transfer business model in exchange for land along the road for residential development. There is also a metro line from Hanoi to Ha Dong city in approval process and this is the second metro line for Hanoi

The next destination

Developers are flocking to Ha Tay as well. Ha Dong city and land along Lang-Hoa Lac expressway are proving the most attractive areas for real estate development.
Ha Dong city is just 15km from downtown of Hanoi and 5km from the My Dinh area.

The rising prices in downtown Hanoi are spurring the satellite developments in Ha Tay, which will provide a new concept of suburban living, an escape from city traffic congestion, high density development, pollution and strained infrastructure and services.

Around 77 new urban and residential areas will call Ha Tay home. Three have been completed, 38 are under construction and 36 are still in the planning phases. The total land area is estimated at 21,000 hectares which could hold 1.9 million people.

In the Mo Lao new residential area which borders Hanoi, Korean firm Booyoung Vina is working on a 5,000-unit high-rise residential complex. Nearby, TSQ Holdings is investing $60 million to build more than 500 villas and townhouses which were sold off the plan long ago.

TSQ management board member Do Quan said the village was just the start of the company’s business in Ha Tay. It is looking to develop three high-rise residential blocks, a twin office tower in Mo Lao and one office and residential tower in Ha Dong at a cost of $100 million. It was also recently awarded a business licence to build and run a university in the town.

Other projects under construction in Ha Dong include a $196 million residential township proposed by Hyundai RNC, a 23ha Van Khe residential area. Nam Cuong Group, which is aggressively expanding property business beyond its established market of Hai Duong and Nam Dinh provinces, is also planning big developments in Ha Tay. The privately-owned group recently began construction on Duong Noi, a 197ha township that will feature residential high-rises, villas, townhouses, a five-star hotel and an international hospital.

The land along Lang-Hoa Lac expressway is attracting hundreds of developers. More than 20 new urban and residential areas are under construction or planned along the expressway.

An Khanh area, which is just five kilometres from My Dinh, has attracted large projects such as the Bao Son Paradise, a tourism complex that has 331 villas and an entertainment area. Nearby are two other bigger projects, namely South An Khanh which is being built by Sudico on 181ha and North An Khanh which is being jointly developed by Vinaconex and Posco E & C with some 6,400 apartments and 1,300 houses.

Five kilometres farther on the expressway is the new planned residential area of Quoc Oai district. This area is now home to several developments such as a 200ha golf course and residential complex being developed by Tuan Chau Ha Tay Joint Stock Company and a 50ha villa complex built by CEO Investment JSC.
Ngoc Liep new town that will cover both Hoai Duc and Thach That districts will be developed into an eco-urban area while Thach That is a hi-tech centre that is already home to Hoa Lac Hi-tech Park.

Brand-name developers are also moving into Ha Tay, signing deals with local authorities for the planning and construction of large townships and tourism complexes. PetroVietnam Group member Petrowaco is cooperating with Indochina Capital to work out the master plan for an 840ha township while Tan Vien Petroleum Joint Stock Company has received a licence for a $160 million tourism complex and golf resort in Suoi Hai Lake.

Housing and Urban Development Corporation (HUD) has also signed on deals for five residential and commercial projects with the first two expected to start construction this year.

Some big challenges ahead

Challenges do remain for investors and developers in Ha Tay, chief amongst them is the development of a transport system to connect residential areas of the province with Hanoi.

The recent construction of a 4km road linking Le Van Luong street in Ha Noi with Ring Road No.4 in Ha Tay that will run through a number of residential townships is a good start.

But work has only begun on the Ha Tay side while the 4km on the Hanoi side hasn’t got underway due to compensation problems over resident resettlements. As there are no signs construction on Hanoi stretch will start soon, residents of the Van Khe and Duong Noi townships will still find it inconvenient to access the capital city.

Another massive problem is the lack of public facilities in new residential areas. Many developers are planning thousands of villas and apartments but are inexplicably showing little interest in building schools or shopping centres to cater to their residents.

Richard Leech, executive director of CB Richard Ellis property consulting company, said the challenge for property developers in Ha Tay is to sell a product that is perceived to be in an area far from the city.

“Residential developments will need good infrastructure and complementary services such as schools, shopping centres and hospitals. Such developments carry a heavy cost and need to be handled by professional and experienced developers and operators,” he said. “We believe that a large regional size shopping centre will act as a catalyst for future development of the area mentioned above, however the land prices need to be kept reasonable in order to attract experienced developers,” he added.

Site clearance has proven another sticky issue that developers in Ha Tay will find hard to resolve. Residents in the province have long been known for their protests against resettlement and toughness in land compensation negotiations. Although local authorities have been assisting developers, negotiating compensation and resettlement has not come easier.

A case in point is the Sky Lake Golf Resort in Chuong My district, a $22 million golf resort developed by Korean investors, who received their licence over a year ago. Work has not begun as local residents have dug their heels in and demanded high compensation packages.

“Site clearance is the greatest obstacles as residents hold onto the land for future prospects given that there will be more than 100 new projects in Ha Tay,” said Leech.

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