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Hà Nội, a Metropolis in the Making

Sylvie Fanchette

Part Two. The 2000s: Raising Hà Nội to the rank of metropolis

Chapter 5. Land reforms and economic liberalisation

L. Pandolfi, D. Labbé et J.-A. Boudreau

Texte intégral

1During the period of the vast national housing programme implemented by the Ministry of Construction between 1975 and 1985, 80,000 lodgings a year were built in Hà Nội in KTTs (or Khu tập thể), collective housing units mostly intended for civil servants. This number then fell to 40,000 in 1986. Although construction of housing in the capital during the 30 years of the collectivist economy was insufficient, this was in large part due to the population doubling in size, but also to widespread structural damage during the American bombardments from 1966 and 1972 (Parenteau, 1997; Pandolfi, 2001).

2At the end of the 1980s, in the face of the state’s incapacity to guarantee the right to subsidised housing for its civil servants (about 30% of officials and state employees lived in public housing), these citizens started to build in large numbers and without regulation: a black market in land for construction emerged. The rigid framework of non-market management of land use could not cater to rising demand for housing. A mixed formula of housing construction was then promoted by the state: ‘the state and the people building together’, thus marking the transition from a planned system to a system promoting individual initiative framed by public services.

3In this manner, the withdrawal of the state from construction, the accumulation of private household capital during the collectivist era and the guarantee of land usage rights by the 1993 land law resulted in an outright boom in self-building. But 15 years later, the shortage of housing in the capital has still not been eliminated. In addition, according to experts from the Ministry of Construction, these dwellings built by inhabitants do not meet the urban standards of a capital aspiring to international status. This model of urban development is characterised by a failure to generate basic urban services and a low density of buildings, responsible for urban sprawl over agricultural land (Boudreau & Labbé, 2011).

4At the beginning of the 2000s, fresh political choices concerning urbanisation ‘put the central state back at the heart of housing construction’ (Quertamp, 2010). The state studied the establishment of new programmes for building large numbers of dwellings. The central government created ‘new urban areas’ for housing or khu đô thị mới (KĐTM), priority sectors selected for urbanisation on the outskirts of big towns. These areas enjoyed advantages for the acquisition of plots of land and for their development. At the same time, the government established administrative and operational structures to facilitate their development as sites for building and then enable construction. So public companies with managerial autonomy were formed. These are mixed-capital companies, combining public and private interests. They manage their capital in order to make a return on investments in the very short term, along the lines of a private company, while benefitting from the structures, as well as the logistic and human means, of their supervising institution (Cerise, 2010).

5However, these projects differ from their predecessors on crucial points, such as the size of flats (the ones in KĐTMs are three times bigger than those of KTTs), their structure, and conditions of allocation: in KTTs, the flats are rented to civil servants, workers and the armed forces, while the social class with access to KĐTMs is much more affluent, particularly as the flats are for home ownership and are subjected to very high overbidding, owing to all the land speculation taking place. Indeed, demand is so high that their commercialisation is closed even before construction of the blocks begins. Theoretically, the flats are allocated according to a priority list made up of civil servants and city residents. Even if the advertisement made by companies tasked with construction and marketing targets civil servants, the allocation system has not employed the founding ideological and social principles of the KTTs. Although the construction, financing and marketing of dwellings fall under the authority of semi-public circuits with a significant implication of supervisory public institutions, they enter into the circuit of private speculation as soon as they are sold (Cerise, 2010).

6In this fashion, the right to accommodation, established as a fundamental right of the socialist state, suffers repercussions from the market economy. This poses the additional problem of financing public infrastructure in a context of returns on private investments, in the absence of the state’s capacity to free up enough funds to contribute to this.

The ‘state with the people’: urban sprawl and self-building (the 1990s)

7At the end of the 1980s, the reformers within the Party devised a mixed formula of housing construction. Through the order of December 1985, the government created a new housing policy conceptualised by the formula ‘the state and the people working together’. Instead of financing construction of housing for their employees with the state budget, public bodies and companies called for funds from individuals. In the minds of those who formulated this policy, these state companies and organisations had to be the real arbiters of construction.

8Until the adoption of reforms, these state companies were the realisation of the political principle of supervision of the population by a multitude of social and political organisations. It was these organisations and state companies that had to finance the development, the state simply making plots of land available at very low prices. The state companies then added development costs onto the price of land and housing sold to individuals. These individuals had no initiative over construction. As employees or members of organisations, they applied for a lot or a dwelling on a plot of land allocated to them by their employer. The partnership was thus reserved for the same categories of the population as allocation of KTTs: party officials, public sector employees, the armed forces and workers. A selection through criteria of merit at work and political or trade union activities completed the favouritism enjoyed by supporters of the regime among the population.

9But it was individuals who gained ascendancy over organisations when it came to production. The first explanation for this is that it was they who provided the necessary resources and who chose the kind of building they wanted. No blocks of flats were therefore built. In addition, the partnership policy went against the institutional organisation of housing production. The administrations and companies proved rigid in their manner of operating. A recurring and fundamental trait of Vietnamese reform, it was ‘people’ who took matters in hand and got organised within each company, each institute or ministry to find land and get housing built. The companies merely redistributed land allocated by the state to their employees. Most did not even fund the development of sites.

10In these conditions, it was individuals who took the initiative and became the prime movers in the building of accommodation. It was the reclamation by the people of the partnership that made it a key moment in Vietnamese policy. People realised that they could now build their houses freely, sell them and rent them. Since housing was now considered as a commercial product, the legal corollary of this reform necessarily included the right to rent and buy dwellings and thus the recognition of property rights over land. The 1985 order made provision for individual people to pass on their property rights, but only in cases of divorce, resettlement, accident, etc.

11The population interpreted the partnership policy as official recognition of individual production, which until then had been illegal. People stepped in large numbers into the pre-existing breach in the administered land system to acquire all available land. The traditional means of access to land by purchase of unused lots from organisations, or in peri-urban villages, took on a hitherto unknown dimension. As early as 1988-1989, green field sites, rural gardens or even lakes of the capital were progressively encroached upon by individual constructions.

Photo 7
New residential neighbourhoods amid the paddy fields in the shadow of gravestones

12Oppression having disappeared, market mechanisms could ‘resurface’ and the hitherto hidden value of commercial goods could attain full expression. The emergence of this de facto land market was thus in contradiction with the political principle of partnership, for it was never envisaged by the state to put an end to state management of land. It was the sale and purchase of houses that were authorised, not similar transactions involving land.

13Although of unequal quality, self-building was salutary in terms of housing conditions: nearly 10 m2 per inhabitant in 1997 in Hà Nội. On the other hand, this only worsened citywide urban planning problems: system overload, deterioration of the environment, streets choked to a standstill. It is in this context that one must place the wish of public powers to develop new residential and industrial zones in Hà Nội from the beginning of the 1990s.

14One of the principles of the state-population partnership is the production of superior quality housing developments. They are supposed to consist of blocks of flats built by public bodies and individual houses built by individuals on land developed by these same organisations. Plans for housing estates are usually drawn up by the construction department or by the Municipality. They are then given a stamp of approval by the Chief Architect’s office or the construction department and finally a building permit is issued.

15Individuals then take charge of building their houses and employing bodies must supervise the installation of facilities, as well as the construction of blocks of flats. However, this has never gone according to plan. Individuals refuse to pay sums in advance without having guarantees over the construction of housing and the length of time it would take to build it. There is no demand for this kind of accommodation. Individuals seek to acquire a separate dwelling and not a flat in a shared building. The very poor reputation of blocks built during the previous period goes a long way towards explaining this attitude. Land made available to organisations is therefore not built upon by them in the shape of blocks of flats, but simply divided into lots handed over to employees who then develop and build on them.

• Production of varying quality: the example of Giáp Bát

16The neighbourhood of Giáp Bát North was built over a filled-in pond of 2.6 ha south of the capital. Situated in a very low-lying area, a third of it was formerly covered by water. Until it was integrated into the urban district of Bà Trýng in 1981, the village of Giáp Bát was specialised in fish farming (Phạm Thái Sõn, 2010).

17The strong presence of water suggests the necessary participation of the state and its services to make land suitable for construction. Eight organisations received land for development in partnership between 1991 and 1995.

18The desire to make a maximum number of lots is a characteristic shared by the partnership policy. In the face of pressure from public bodies, the municipality cannot reserve enough space for areas free of buildings or for roads (contracts with the municipality stipulate that 40% of land must be given over to the road network, open spaces and public facilities) (Plate 18), particularly because land is set aside for senior officials of especially powerful bodies within the state apparatus.

19The lots are then handed over to employees without any prior development. To begin with, both the employing organisations and the employees thought that this task was the state’s responsibility, namely that of the municipal services.

20Although they obtain no specific commitment from these services, organisations nonetheless set about dividing up and handing out plots of land. Very often, it is land that appears to be most people’s priority. A piece of land must be acquired at all costs; the question of connection to facilities will sort itself out later. In Giáp Bát, it was only once all the employees had physically taken possession of their plots of land that they had basic facilities installed.

21Building permits stipulate that sewage and running water systems must be put in place before construction begins. They do not decide the conflict between employees and organisations, since both could finance them. On the other hand, works must be carried out by a specialised company. Employees therefore club together to pay for installation of the water system, but their contributions are not large enough to purchase a system that meets applicable standards.

22Therefore, everything depends on the financial power of employing bodies and on negotiations with their employees. Sometimes, it is the workers building the house who do it themselves. Although connecting a house up to the electricity mains is technically quite simple and poses no problem, the construction of sealed or cement roads often remains in suspension. At Giáp Bát, in 1999, namely eight years after building began, roads had still not been built.

23Generally speaking, the people refuse to pay for public infrastructure, be it in the form of local taxes or through contributions to works on an ad hoc basis. Inhabitants prefer to use small neighbourhood communities to finance infrastructure. This reflects the preference of Vietnamese people for micro-communities where everyone knows and keeps tabs on everyone else, along with a widespread mistrust among the Vietnamese of public services and the state in general.

24In the first years of the partnership, individuals had their own houses built. To carry this out, they had building permits issued individually but concerning all the lots allocated to one organisation.

25Building permits issued in 1992 for the land allocated to the Ministry of Interior restricted the height of all buildings to two storeys (3.3 m per storey). This limit has not been respected and third, sometimes even fourth storeys have been added.

26In the years 1994-1995, claiming that structures built under this scheme were of poor quality, as was the infrastructure, the Municipality compelled organisations to have its infrastructure and major structural work brought up to standard by its construction companies.

Plate 18. Giáp Bát, a peri-urban neighbourhood built over a lake and intended for civil servants

Plate 18. Giáp Bát, a peri-urban neighbourhood built over a lake and intended for civil servants

27All in all, the partnership did not achieve its objectives in terms of land management (to reduce the density of the capital’s centre), nor in terms of social politics (to prevent the commercialisation of land and to house a low-paid workforce), nor even in terms of urban planning (to build well-equipped neighbourhoods).

28By 1997, nearly all expanses of water in Giáp Bát North were filled in and turned into built-up areas with a very high population density estimated to be 250 inhabitants per hectare in 2003, according to Jica (the population rose in the period from 1992 to 2006 from 9,367 to 15,369 inhabitants). Inhabitants native to the village only accounted for 25% of the total population of the neighbourhood in 2006. The area is regularly subjected to flooding during the monsoon season, given the lack of adequate drainage infrastructure to evacuate rainwater in this very low-lying area. During the floods of October 2008, 40 sites in the neighbourhood remained under a metre of water for several days (Phạm Thái Sõn, 2010).

The state and the companies regain control (the 2000s)

29Without it being possible to put a precise date on it, a change in the shape taken by urban expansion took place around the turn of the 2000s. In 1998-1999 following the Asian financial crisis, the desertion of foreign capital led the state to apply pressure on major national construction companies so that they would implement residential development projects suspended since the middle of the 1990s. The idea was to restart the economy by supporting construction.

30While real estate promotional activities by Vietnamese companies were, up until this time, limited to modest housing estate projects and to the construction of blocks of flats to re-house people displaced by infrastructure work, these companies then effected a change in scale by embarking upon the development of residential neighbourhoods of several tens of hectares, including several blocks of flats. The first developments of this kind were Linh Ðàm and Ðịnh Công, to the south of Hà Nội (Plate 19).

31This kind of project associating urban planning and real estate construction requires a significant injection of capital. Mergers take place among the main construction-development companies to make up groups with sufficient means to carry out these operations successfully.

32These projects laying out residential neighbourhoods are perceived by the Hà Nội authorities as the solution to several faults of 1990s urbanisation. Associating a high residential density with the creation of large, undeveloped areas, they are supposed to house a great number of people while offering a quality of life symbolised by green spaces and infrastructure–the same features boasted by estates of individual houses. Such projects are also presented as a radical solution to difficulties encountered by the administration in managing individual production (illegal land transactions, building permits not respected, etc.).

33Accordingly, in 2002, more than 25 para-public companies existed in Hà Nội for the development of residential projects. They are all overseen by a public institution, the Ministry of Construction, or a local administration, the People’s Committee of Hà Nội, the Construction Department or the Housing Department. In 2003, more than 70 residential areas were planned around the capital, beyond the second ring road bordered by the Tô Lịch River.

34Although these projects are conceived, wholly managed and financed by the new para-public companies, direct participation by citizens still persists in the financial arrangements of these developments. In the face of problems mobilising funds and the exodus of foreign capital from the beginning of the 2000s, the state again appealed for funds from citizens and also trimmed its urban planning ambitions. The material expression of this policy was soon apparent: projects were immediately revised. The limits of projects, their size, the overall distribution of land use, the major infrastructure works and total number of inhabitants could not be altered. Revisions therefore had most repercussions on the structure of buildings, replacing blocks of flats with individual houses.

35In 2000, development of the Định Công project began. Two months later, work started on 27 hectares of the Trung Yên project. The Yên Hoà project was giving compensation for land in April 2000, while the development projects for Trung Hòa Nhân Chính and Sài Đồng were preparing feasibility studies.

36This sudden acceleration of project preparation demonstrates clearly, after the fact, that the obstacle of compensation for farmers is not nearly as insurmountable as certain developers would have others believe to justify their inaction. Putting individual lots on sale is very popular with ordinary people. At the beginning of February 2000, while development of the land had only just begun, 60% of lots had already been sold. At the end of March, the project’s 100 lots of villas were sold and only a few of the 900 lots of strip houses were still available.

Plate 19. Situation of KĐTMs in the 1990s and new projects

Plate 19. Situation of KĐTMs in the 1990s and new projects

37The fact that no foreign real estate group had agreed to join forces with these projects did not signify that international investors were losing interest in the urban development sector in Hà Nội. Moreover, some groups moved into the market during the 2000s.

  • 1 Mr Ciputra, at the head of the fifth-largest Indonesian industrial group, was part of a delegation (...)

38The first real estate group to propose a development project in Hà Nội was the Indonesian Ciputra1, in 1992. It proposed to the Government and the People’s Committee of Hà Nội to build a new town of 100,000 inhabitants, on 392 hectares between Tây Lake and the airport road (Plate 19). Between 1992 and 1996, Ciputra drew up its project. Rather than a real town, it in fact resembled a gigantic luxury residential and commercial real estate programme. Production (artisanal or industrial) is completely excluded from it. The few facilities are not public but private and are quite clearly intended for the expatriate community or for affluent Vietnamese (international school and hospital).

39The influence of contemporary Asian town planning imported from the United States has given rise to a golf course being laid out among the residential blocks. This is in fact a separate town built within the city, an enclave of self-sufficient prosperity. The project encountered financing problems (due in part to the Asian financial crisis of 1997) and trimmed its ambitions: the planned population was first reduced to 60,000 inhabitants, then to 45,000. In 2012, the project was only half built and mostly inhabited by Asian expatriates and highly paid Vietnamese.

40The flow of foreign investment generated a heavy demand for land on behalf of large Asian industrial groups interested in building industrial parks around the capital. Many projects also concerned the development of luxury residential and commercial areas for the expatriate and rich Vietnamese population. If one adds to this the propositions of development of leisure centres and golf courses, a large proportion of the capital’s peri-urban land is sought after by the foreign investors.

41In the face of this pressure on peri-urban land, the Ministry of Construction and the Municipality set in motion a process to revise the master plan, already renewed several times. In the revised versions, during the 2000s, it was no longer only the development of housing but also its relation to economic activities (industry and services) and the major infrastructure works that were adjudged essential. From this perspective, the new towns became the favoured tool of urban development.

42The Bắc Thăng Long project, which had already been at the planning stage for several years, could then be realised. The request by the Japanese group Sumitomo to build an industrial park to the north of the Red River was behind this project. Plots of land located to the north of the river soon attracted the interest of industrialists because they are at the centre of the capital’s biggest transport hub, formed by the Red River, the road leading to the airport, the one leading to the port of Hải Phòng, and the railway.

43Built to receive foreign companies, this industrial park of 300 hectares must generate a significant need of housing for expatriate management. It was in large part to respond to this demand that a group of American investors proposed to build a vast housing sector of 273 hectares.

The new urban areas: replacing collectivist housing?

44The new urban areas (or KĐTMs) are mostly residential complexes combining tower blocks of flats, one-family houses, shopping centres and public facilities, built on the outskirts of cities, mainly on agricultural land. The guiding principles of this new Vietnamese housing policy had been unveiled in the 1992 master plan, but it only really took off at the beginning of the 2000s.

45These new urban areas were criticised by foreign researchers but also by the Vietnamese press for their segregationist effects. The modernist architectural style of these areas, the morphological discontinuity with the existing urban fabric and the socio-spatial fragmentation that they represent are all elements that hinder their integration into the city. Nonetheless, the KĐTMs are central to the national strategy for housing to 2020.

46While many foreign researchers ascribe these segregationist effects to neo-liberal forces or to a desire for differentiation among the newly affluent classes, it appears to us more appropriate to seek other causes. On one hand, the Vietnamese state encounters difficulties in controlling land speculation, central to enrichment strategies since 1990, and marked by several cases of insider dealing linked to financing mechanisms of new housing (and to the absence of an operational banking system). On the other hand, there is a disparity in the market value of new dwellings and the compensation given to expropriated households.

  • 2 The qualifier ‘low-income’ mainly designates civil service employees (teachers, health workers, of (...)

47Originally, policy for KĐTMs required that 30% to 50% of new dwellings built should be accessible to low-income members of the population2 (thu nhập thấp). The 1992 master plan maintained in this way the socialist objectives of subsidised housing from the collectivist era while proposing a renewed statist vision of urban housing, respectful of new residential aspirations (more spacious accommodation, designed for a single family, private services integrated into the housing, etc.). The new model of KĐTMs therefore differed deliberately from the ‘collective areas’ model (KTTs) that advocated minimalist dwellings.

  • 3 It is calculated however that only 30% of state employees have been able to benefit from subsidise (...)

48From 1954, Vietnamese housing policy launched this huge construction programme of subsidised accommodation in order to meet the housing needs of employees of the new independent socialist state3. The KTTs constituted the first large-scale programme of residential estates conducted autonomously by the Vietnamese administration. During this period, the socialist state built self-sufficient areas from scratch, organised into neighbourhood units around collective public facilities (school, park, medical clinic). This form of housing was modelled closely on what was being built during the same period in socialist countries of Eastern Europe and Asia.

49The new urban areas of the 2000s do not have this sober and collectivist style, but they were built according to similar principles to those that had governed the policy for KTTs: existing constructions were levelled and building began on agricultural land repossessed by the state, erasing all traces of this agricultural history (hydraulic system, sacred mounds, cemeteries), villages adjacent to these areas were ignored, the zone to be developed is laid out according to the road network crisscrossed by highways.

50The KĐTMs were also planned in a ‘synchronised’ manner, namely the commercial, residential and public buildings had to be built simultaneously in order to produce multifunctional spaces intended to be self-sufficient (and to avoid the North American syndrome of deserted central business districts after office hours).

51This noted return into planned and modern production of housing followed a period of intense self-building of housing that had been formally recognised at the end of the 1980s with the official abandon of the policy of KTTs and the adoption of a co-operation protocol between ‘the state and the People’ that invited the private stakeholders to become the project managers in the production of their own housing of which they could henceforth be the legitimate owners.

52In contrast with the model of KTTs, the KĐTMs are in line with the economic liberalisation of the country. This does not concern subsidised housing, but a financing mechanism that encourages land speculation to the disadvantage of the less affluent. The public authorities transfer at low cost the usage rights of the area in question to a developer. In return, this developer must build infrastructure there (aqueducts, sewers, electricity), public facilities and sometimes also a part of the road system. These facilities are then retroceded to municipal companies of urban services.

53The construction of housing is financed by the purchasers-investors who pay the rights of usage and ownership of their lodging in a few payments spread out over a short period prior to or during the construction. The municipality theoretically fixes the initial sale price at the time of its approval of the housing project. However, these dwellings are usually resold more than once before completion. Resale prices are regulated solely by market forces. This financial model favours insider dealing and confers market values onto dwellings that are several times greater than the compensation received by neighbouring villagers for the loss of the agricultural land upon which are built these new urban areas.


54The first land and administrative reforms to galvanize investment in the construction sector and halt the practice of popular self-building in the 1980s and 1990s have shown the importance of alliances between the public sector, the only entity capable of facilitating access to land, and the private sector (Vietnamese or foreign) providing capital. In the absence of sufficient capital to invest in construction, the public services have used land as a source of income.

55After more than a decade of construction by inhabitants and small-developers, within the framework of the policy labelled ‘the state and the people building together’, the return to large-scale property operations within the framework of the new urban state policy marks the aggressive entry of foreign investors and their alliance with formerly public construction companies.

56Opening up towards the outside world and the desire to liftHà Nội into the ranks of great Southeast Asian capitals require more liberal reforms and land for the capital to measure up to the government’s ambitions. But will this ‘top-down’ urbanisation manage to halt the ‘bottom-up’ kind, and to impose its urban model onto this densely populated plain?


1 Mr Ciputra, at the head of the fifth-largest Indonesian industrial group, was part of a delegation of investors from the archipelago that came to prospect the Vietnamese market during a visit by President Suharto. Mr Ciputra apparently had the idea of creating a new town during the trip from the airport to the city centre, crossing the paddy fields to the west of Tây Lake.

2 The qualifier ‘low-income’ mainly designates civil service employees (teachers, health workers, office employees), the military and the families known as ‘public politicians’ (gia đình thuoc dien chinh sach) of which one of its members played a role in the Colonial and American Wars. Given that their income is low, the state intervenes in their favour via its housing policy. This category of households cannot be assimilated into the impoverished population living in the countryside or with illegal migrants who are not targeted by the housing policy

3 It is calculated however that only 30% of state employees have been able to benefit from subsidised housing. New households that appeared in the city during this period therefore squeezed into dwellings in the central neighbourhoods and into those newly built in the collective areas, a situation illustrated by the record densities of population observed at the end of the war.


PhD in Urban Studies from the Institut français d’urbanisme, is a specialist in urban land issues in Vietnam and is a former Co-Director of the Institut des métiers de la ville in Hà Nội.
He is currently in charge of the Asia Sector for the Île-de-France Region’s Department of Urban Planning. He is responsible for the implementation of co-operation projects aimed at improving proficiency in tendering of local public contracts in the fields of urban planning, development and urban services.

PhD in Urban Studies from the School of Community and Regional Planning (University of British Colombia). She is Assistant Professor of Urban Studies at the Institut d’urbanisme, université de Montréal (Canada).
Her research interests include the peri-urbanisation of Southeast Asian cities, particularly that of Hà Nội where she did her doctoral research, management of architectural and urban heritage in North American and Southeast Asian contexts, and habitat production, urban governance and informality in Global South cities..

PhD in Urban Planning, School of Public Policy and Social Research, University of California Los Angeles (Ucla). She is currently Associate Professor at the Institut national de la recherche scientifique, centre urbanisation culture société (INRS-UCS) in Montreal, and Tenured Canada Research Chair in Urbanity, Insecurity and Political Action.
She founded and directs the Ville et ESPAces politiques (VESPA) Research Laboratory. Her work explores the relationship between citizens and the state in a context of urbanisation.

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