HANOI, Vietnam — Tourists, hawkers and motorcyclists rub shoulders every morning in the congested alleyways of Hanoi's low-rise Old Quarter, which seems generations away from the office towers and electronics megastores springing up in other parts of the capital. The quarter's street grid, laid out in the 15th century, is still dominated by dilapidated shops selling everything from brass gongs to bamboo scaffolding.
It is now among Asia's best-preserved urban hubs of traditional commerce — thanks largely to decades of inattention. The 82-hectare (203-acre) downtown area is crammed with Buddhist temples, pagodas and French colonial shophouses, whose original tiles and peeling yellow paint have become a draw for foreign visitors.
But with property values high, this neighborhood could change dramatically in the coming years as similar ones already have in Singapore, Shanghai and many other cities. Authorities want to begin gentrifying the Old Quarter by relocating 6,200 households between this year and 2020. New construction is likely a few years away, but some residents already have been relocated.
Some of them are nervous, though not necessarily over lost history. They worry about being exiled to the city's dusty margins, and of being forced to accept a bad deal from a Communist government that has generated public discontent across Vietnam by forcing people off their land with compensation far below market rates.
Pham Dinh Tranh, a retired jeweler in the Old Quarter, has watched many of the traditional jewelry workshops of Silver Street slowly morph into cafes and souvenir shops. The 82-year-old wouldn't mind a change of scene: The Silver Street home he shares with his extended family is cramped and the roof leaks. But he said Hanoi officials will need to make a convincing case for relocation.
"We're willing to go, but not if they take this property and resell it for profit," Tranh said.
Vu Thi Hong, an official with the Hanoi government's Old Quarter Housing Relocation Project, said the main goal of the planned relocations is to reduce population density while preserving cultural heritage. With about 66,000 people, the quarter has a population density of 823 people per hectare (2.5 acres) — nearly eight times New York City's.
One Silver Street temple — formerly occupied by long-term squatters — has been refurbished and opened to the public, with assistance from architectural consultants from the French city of Toulouse.
During an interview at the temple, Hong said compensation for relocations is paid at market rates determined by the government. City planners have not yet decided what will be constructed once current residents are relocated, she added, but new buildings won't exceed three stories.
She said a few hundred Old Quarter residents have been moved in the last decade from weathered temples and pagodas, and authorities plan to build an apartment complex on Hanoi's outskirts to house thousands of others.
"Most of those who have already been moved say they have a better life now," Hong said, adding that the government pays up to 81 million dong ($4,000) per square meter at streetfront properties.
In Hanoi's real-estate market, the average transaction price at Old Quarter properties is currently between $12,500 and $15,000 per square meter, according to Nguyen Son, a property agent in Hanoi. That exceeds the average price of $9,337 per square meter paid at luxury residential properties across Shanghai, as calculated last year by the London-based consultancy Knight Frank.
Pham Ba Bao, who was relocated from Silver Street in 2010, is not entirely satisfied with his new situation.
The retired bicycle maker used to live in the temple that has since been refurbished. He said he received 900 million dong ($42,300) and later purchased an apartment about seven miles away for 474 million dong ($22,278).
"We're happy with this apartment, but we can't make a living," Bao said recently at his new place, down the street from some gasoline storage tanks.
He said he used to earn 200,000 ($9.50) to 300,000 ($14) per day selling tea outside the temple, but foot traffic in his new location is minimal. He now survives mainly on the 3 million dong ($141) per month his daughter-in-law earns as a hairdresser.
Scholars say vendors and artisans were among the first residents of the Old Quarter's 36 streets. When some traders fled to the former U.S.-backed South Vietnam in the 1950s, the north's Communist government seized their shophouses and divided them into apartments.
Romain Orfeuvre, an architect from Toulouse who works in Hanoi, said the Old Quarter resisted change decades ago because of stunted economic development during Vietnam's wars against France and the United States, and more recently because authorities have been reluctant to evict squatters.
Hoang Thi Tao, who runs a newspaper stand near the Old Quarter, is cautiously optimistic about the impending changes.
"The project will help to make the Old Quarter prettier, improve its residents' living standards and lure more foreign tourists," Tao said. "But it'll also require a lot of resources and determination on the government's part. They'll need to give big compensation offers to persuade those people to leave."