Collaborative development: Capturing the public value in private real estate development projects in Ho Chi Minh City, Vietnam

Abstract

A B S T R A C TThis article addresses a relative gap in the literature on real estate development and property rights in transitional economies, particularly on the "shadow" role of private developers in urban management at the local level. The paper argues that the development of high-rise buildings in Vietnam resulted from the national privatization policy shift known as Doi Moi that gave landowners greater rights. These changes in land rights policy are important constitutive elements for institutional functionality of value capture via privatization of land, to become viable and effective. Further, the paper describes how private developers (foreign and domestic) take advantage of vague and indistinct city governance regarding privatization of land, while the property rights of the original users of the land are insufficiently protected. These issues are illuminated and analyzed through the use of three case studies of commercial projects in Ho Chi Minh City. We suggest a further institutionalization of privatization of land and value capture in Vietnam.

Value Capture and Vertical Allocations of Public Amenities

“…A key problem has been the lack of overarching legislation that empowers cities, creates transparency, spells out the conditions that allow vertical exactions, and facilitates the forfeiture of city plots in exchange for floor space. The missing regulatory framework poses quite a challenge in the context of value capture [53,66]. On one hand, the regulatory void creates room for local practices and rules, such as the ones created by some Israeli cities.…”

“…The building accommodated private and public spaces (including a pedestrian walkway, plazas, and a garden). In Vietnam, the city of Ho Chi Minh gave up public ownership to enable the development of a mixed-use high-rise tower (REE Tower), in which public open space was provided to the city in exchange for density bonuses [53]. In the United States, cities like Seattle have experimented with density bonuses to create compact development by enticing developers to incorporate public facilities in their high-rise buildings [54].…”

“…From these examples, it appears that it is possible to link value capture instruments to policies that increase the availability of floor space for use by the general public. Value capture can facilitate the vertical expansion of developable land [53], and encourage ancillary benefits such as the creation of a mixed-use city. Negotiated agreements, regulation, and land readjustment can promote vertically by providing public floorspace in high-rise developments.…”

“…They have been implemented ad hoc by Israeli cities without a comprehensive regulatory framework. As such, the Israeli case is similar and relevant to transitional economies where "proper value capture mechanisms to finance public infrastructure are missing" [53] (p. 108). The investigation of vertical allocations is particularly relevant given calls by international institutions to improve the capacity of cities to raise public funds and improve the equity of public planning by providing public amenities through value capture [62,63].…”

State Control Versus Hybrid Land Markets: Planning and Urban Development in Transitional Hanoi, Vietnam

“…Current legislation lacks mechanisms with which to evaluate the value of infrastructure projects and reciprocal land acquired for BT projects. The absence of legal mechanisms for accurately evaluating the increasing value of land due to urban projects has been mentioned in previous studies [45,46]. Through negotiated land conveyance, developers who obtain land through one-off land allocations gain enormous profits from land redevelopment, without paying development charges and value-added tax to the government.…”