Surge in Land Prices in Southern Market, by Phan Vi
Recently shared, longtime broker Phan Vi in Ho Chi Minh City revealed that the wave of land prices is showing signs of increasing in the Southern market due to the pressure of this segment reaching its limit.
Previously, with regards to the real estate market in general and land in particular, in 2024, Phan Vi believed that the market in Q1/2024 was in a quiet state as investors observed and explored. Moving into Q2/2024, the real estate market began to heat up slightly due to the loss release from Q1/2024.
The products sold in this quarter are still discounted items from Q3/2023. In Q3/2024, the market will witness a series of projects being released and implemented with vibrant sales policies. Moving into Q4/2024, land and housing transactions will be much hotter than the same period in 2023.
“In 2024, the real estate market will not undergo significant fluctuations but will be more positive than 2023, with clearer signs of recovery,” emphasized Phan Vi.
In terms of the land segment, according to Phan Vi, the demand is showing signs of increasing. The supply is quite diverse in provinces and cities such as Binh Phuoc, Binh Duong, Dong Nai, Long An, and Tay Ninh. After observing for 2-3 years, investors have understood the fluctuation waves in each area and started to invest.
Phan Vi analyzed that over the past 2 years, there have been investors holding onto land but with a rushed investment mentality, not considering individual liquidity. When the market declined and the economy slowed down, they hurriedly sold off in order to shift their investment model. During this period, there were also many investors who found themselves in a predicament as they saw land prices drop. Many places suffered losses. The desire to buy real estate has increased significantly. Currently, many people are afraid of missing the opportunity, so they make decisions more quickly.
Photo: Ha Vy
Phan Vi believes that land is an easily investable form with high liquidity when the following conditions are met: Good residential location; Less land product in the area; Stay ahead of infrastructure development (urban planning, district, township, adjacent to highways, adjacent to key economic areas…); Development period of the area (mid-term, long-term) is at least 3 to 5 years.
Currently, there are still many opportunities for the real estate market in neighboring provinces of Ho Chi Minh City. For example, in Dong Nai, the price range for townhouses is from 75-100 million dongs/m2 in the city center. Residential land, subdivided land has prices ranging from 15-20 million dongs/m2. Amongst them, the source of land for investment during the 2019-2020 wave is priced at 8-12 million dongs/m2, and investors are still selling at this price. These are people who want to recover their capital or have minimal profit, and even some cases have a loss of 10-15% compared to the original purchase price a few years ago.
With many years of experience in brokering and investing, Phan Vi offers advice for investors buying land in this stage.
Firstly, investors must calculate personal liquidity. Whether to purchase with cash or to borrow. Whether they can withstand a declining market or not. Additionally, investors must consider financial solutions if interest rates increase in the near future. At the same time, determine a medium to long-term investment period of 3-5 years.
Secondly, regarding the purchase price, if investors can buy land in 2024 at the market price of 2019, that would be excellent. If they can buy at the 2021 market price, it would be acceptable.
“Land price surges often occur in a short period and do not last. If there is an opportunity for speculation, investors must be very quick and the incoming products must be good. The rate of speculation is high when the conditions for investors to buy cheap land from 35-45% compared to the market price are met, and the products in the area are still scarce. If there are many products, investors must wait for the next wave in 2 years. The fluctuation in the land market at this time is quite fast, so if investors can buy at a good price, they shouldn’t wait, and when there is an opportunity, they should push the product,” advised Phan Vi.
According to observations, the Southern land market has just “rippled”, with transactions appearing, and landowners also hesitant to increase prices. Currently, there have been cases where brokers, having reached an agreement with customers and near the transaction closing stage, were informed by the landowners that the price has changed. There have also been cases where landowners initially put their properties on the market but later “pulled back” to wait for a different selling price.
These psychological tendencies are easy to spot as many people take into account market signals to “weigh” the selling price. However, the majority of recent real estate transactions are still discounted items that have been offered since the previous period but have not been absorbed. Selling land at market prices like early 2022 is not easily achievable.
