According to that, the 5 suburban districts of Ho Chi Minh City are proposed to be developed into 3 cities, with the North City (Cu Chi and Hoc Mon), the West City (Binh Chanh), and the South City (Nha Be and Can Gio). This information has attracted the attention of investors as these areas are hot spots for real estate and sensitive to infrastructure and planning information.
Over the past year, real estate in Cu Chi, Hoc Mon, Binh Chanh, Can Gio, and Nha Be has been stagnant in terms of supply and transactions. These areas have seen instances of land and house sales at a loss. In the first quarter of 2023, there were almost no transactions even though real estate prices were deeply discounted. Since the third quarter of 2023, the phenomenon of loss cutting has decreased. However, the real estate market has not shown much improvement in terms of transactions.
Market surveys of these areas close to Tet (Lunar New Year) show that new information about infrastructure and planning has had little impact on prices and transactions. Perhaps the deep price reduction trend has stopped as investors expect real estate prices to increase.
Individual plots of land and houses are still on average 10-20% cheaper (depending on the product) than market prices. For urgent sales before Tet, the price reduction can be up to 30%. However, the number of urgent sales is insignificant.
Nha Be, Binh Chanh, Can Gio: Secondary land prices slightly decrease or remain unchanged
According to the observations, from October 2023 until now, the downward trend of land prices in Nha Be, Binh Chanh, and Can Gio has shifted from a sharp decline to a slight decrease or remaining unchanged. This process is not consistent across different localities.
Around Tet, secondary land and individual house prices in Binh Chanh and Nha Be have locally decreased by 10-25%, which is about 5-7% lower compared to the beginning of 2023. Some large plots of land with secondary investors are willing to negotiate an additional 5-10% discount for quick payment. In Binh Chanh district, prices of secondary market land have decreased by 15-25%, depending on the size of the land. Some large agricultural land plots of over 5,000-10,000 square meters have even dropped nearly 30% as the owners faced financial pressures and could no longer afford the interest and bank debts, forcing them to sell. Land plots in Tan Tuc, Tan Kien, and Binh Hung projects have also decreased by nearly 15% compared to December 2022. According to brokers, despite the price reduction, the number of transactions is not significant.
In Can Gio, the price reduction for secondary land ranges from 7-30%, depending on the product and location. Some land plots in areas such as Phong Phu and Long Thoi were previously discounted by 30-35% in the first half of the year and remain at reduced prices because buyers have not been found. Small residential land plots on Giong Ao street were advertised at 34 million VND/square meter at the beginning of 2023 and are currently being offered at around 30-31 million VND/square meter, a decrease of more than 10% compared to early 2023.
Mixed-use land (agricultural land and aquaculture interlaced with residential land) along the beach in Can Thanh town of Cần Giờ has seen large plots of over 2,000-3,000 square meters being offered with a 20-25% discount compared to the early months of 2023, but the transactions have been slow.
From 2018 to 2020, real estate prices in Can Gio increased by over 200% during land fever periods. Research shows that land plots on Dang Van Kieu street in Can Thanh town (Cần Giờ) had prices of 6-7 million VND/square meter in 2017, but by 2019, they had increased to 20-21 million VND/square meter, a growth rate of over 200%. Currently, land plots on this street have prices ranging from below 50 million VND/square meter. In Long Hoa commune, the average price increased from 16 million VND/square meter in 2017 to nearly 40 million VND/square meter in 2020. This price continued to increase to nearly 55 million VND/square meter in 2021-2022, only stopping at the end of 2022 until now.
During the peak period of 2017-2018, real estate prices surged on major roads in Binh Khanh, Long Hoa, and Can Thanh communes. The peak of the real estate frenzy started in April 2017 from an area that was still unappealing and had the lowest land prices in Ho Chi Minh City. Since then, the land prices in Can Gio have risen significantly. Most land transactions in this area involve large plots of over 1,000 square meters, or even hectares, including mixed-use land, with some hundreds of square meters as residential land, and the rest as aquaculture and agricultural land. Currently, small residential land plots in Can Gio are in short supply.
Therefore, the secondary land prices in Nha Be, Binh Chanh, and Can Gio have all decreased to varying degrees. The extent of the decrease varies depending on the product and the area. It mainly affects the group of investors who use leverage or take advantage of favorable interest rate programs and principal repayment deferrals from 2018 to 2022. However, according to brokers, most investors are still in a loss-cutting position and are reluctant to sell at a loss.
Hoc Mon, Cu Chi: Investors “holding inventory” waiting for price increases
In Hoc Mon district, the prices of some main road land plots in Xuan Thoi Son, Xuan Thoi Thuong, and Ba Diem communes have remained around 18-23 million VND/square meter, a decrease of about 10-15% compared to early 2022. From December 2023 until now, most of these plots are still being offered at the same prices. Some landowners are willing to offer an additional 10% discount on the reduced prices for a transaction, but the overall demand remains weak.
From the first to the second quarter of 2023, land prices in Cu Chi decreased by about 25-30% compared to the beginning of that year. This decrease showed signs of slowing down from the third quarter of 2023 until now. Currently, there is a 10-25% price reduction for secondary market lands that investors need to urgently sell before Tet to generate cash flow. Large agricultural land plots for farming and long-term cultivation in Cu Chi are offered at 6-8 billion VND per plot. However, some plots have dropped nearly 2 billion VND, but they have been on the market for the past 6 months without any transactions.
Starting from early August 2023, the Hoc Mon land market has seen a situation of investors urgently selling assets due to financial difficulties. For example, a 90-square-meter plot in Tan An Hoi commune was offered for liquidation at 820 million VND. A 100-square-meter land plot with a land title in Thai My commune is currently being advertised at around 750 million VND, a 920 million VND discount. In the case of large plots with alternating agricultural and residential land in Tan Phu Trung commune, there have been cases where landowners reduced the prices from 9 billion VND to 6 billion VND to sell off their holdings. Until now, the price reduction and the situation of investors urgently selling assets have become clearer. Many investors are hoping that with the new planning and infrastructure information, prices will start to rise from 2024 onwards, so they are holding onto their inventory.
A recent report by Nha Tot showed positive developments in the Cu Chi and Hoc Mon land markets after a period of decline. Specifically, land prices in both districts have shown growth compared to the second quarter of 2023, with increases of 16% and 32% respectively. At the same time, the number of contacts made after viewing advertisements in both districts has also grown positively, with particularly significant growth in Củ Chi district at a rate of 2.2%. In this market, both land plots under 3 billion VND and in the 3-7 billion VND range have seen an increase in the rate of interest in Hoc Mon district, with growth rates of 1% and 4% respectively. Conversely, land plots over 7 billion VND have seen a decrease of 7% in interest and search rates.
The observations show that the supply of real estate to the Hoc Mon and Cu Chi markets mostly comes from investors who have been accumulating inventory for many years. Land prices in these areas have also risen significantly. Agricultural land in remote areas of Cu Chi and Hoc Mon is already priced at 5-7 million VND per square meter for large plots, while residential land prices range from tens of millions of VND to over 100 million VND per square meter. In Hoc Mon, residential land plots measuring 70-150 square meters are being offered at prices ranging from 4 to 5 billion VND. For smaller plots, there are hardly any with prices below 2 billion VND.
After experiencing multiple booms, the real estate price level in Hoc Mon and Cu Chi has reached a new level. However, compared to the South and East regions of Ho Chi Minh City, these areas are still considered “price lowlands”.
Mr. David Jackson, CEO of Avison Young, has assessed that real estate in Cu Chi and Hoc Mon has a lot of potential for price increases in the future due to several reasons. First, there is still a large amount of land in these two areas, and prices are still low compared to other areas of Ho Chi Minh City. Second, as more investors come to Hoc Mon and Cu Chi, the development of these areas will be accelerated. The announcement of signed memorandums of investment commitments worth nearly 17 billion USD at the investment promotion conferences in Cu Chi and Hoc Mon in early April 2023 is a clear indication of this trend. In addition, according to the development orientation, the Northwest urban area will have functions such as services, commerce, healthcare, culture, education, physical fitness, and entertainment resorts. This will also stimulate real estate development. However, experts also warn that when buying real estate in these areas, buyers need to carefully research and not chase after information about planning or mega-projects that could lead to high-priced assets.
According to experts, the recovery of the land market may be slower compared to other real estate types due to various factors, and it may not reverse until the end of 2024. Real estate investment credit is still limited, and although interest rates are gradually decreasing, it will take 3-4 quarters to return to the interest rates of 2021. Especially, the market sentiment for investment and speculative real estate segments is still low. Therefore, the recovery of land prices will be slower compared to other types of real estate.
From a cautious perspective, Mr. Tran Khanh Quang, an experienced real estate investor, believes that there is still interest in land plots, but it is not enough to revive the market. Land plots in suburban areas are going through a difficult period. This is a speculative type of real estate, so the recovery will be slower compared to other types. The investment sentiment is still weak at this stage, so it is not yet time to revive land prices in the short term. However, according to Mr. Quang, land plots always attract Vietnamese people. Once the market starts to recover, land plots will be a type of real estate that receives a lot of attention and demand. He predicts that price fluctuations in transactions will end in the first half of 2024, but this recovery will not be synchronized. Land plots in the suburban areas of Ho Chi Minh City will recover first, followed by neighboring provinces.