Land Parcel Transactions Signal Market Recovery
Recent land transaction indicators suggest that predictions of a sector resurgence are on track.
In the first quarter of 2024, sought-after land parcels with clear legal status and competitive pricing experienced a notable surge in transactions and interest. Real estate agents, once idle, are now busier, with the number of prospective buyers significantly increasing compared to 2023. In the vicinity of Ho Chi Minh City, plots priced between 2 and 2.5 billion VND saw the highest transaction volume.
According to Batdongsan.com.vn, user inquiries for land parcels have improved in the early months of 2024. Specifically, in Q1 2024, nationwide interest in land parcels increased by 48%, up from 44% in the last two quarters of 2023.
Demand for land parcels in Q1 2024 in the northern region surged in certain outlying districts of Hanoi, such as Dong Anh, Long Bien, and Hoai Duc, with increases of 1.7 to 2 times compared to Q1 2023. In the southern region, demand for land parcels in Districts 9, 12, Thu Duc, and Hoc Mon rose by 13 to 25%.
Photo: Ha Vy
Analysts consider land parcels a “prime investment.” After a period of inactivity, demand has returned. While the market is not as buoyant as in 2021 and 2022, buyers are quietly expressing interest in land ownership. Expectations abound for land parcel prices to experience a “significant jump” from late 2024 onwards.
An earlier survey by research firms indicated that land parcels were the most sought-after segment in early 2024. The response rate for this segment significantly exceeded that of others in the market. However, since then, land parcels have not yet seen a full-fledged recovery. The “reversal” in demand is likely to occur sometime after late 2024.
In terms of price fluctuations, land parcels have experienced continuous growth since 2018. During Q3 2023, nationwide land prices increased by 38% compared to the same period in 2018. The southern market witnessed the highest land price increase, with an increase of almost 71%, while the increase in northern provinces was around 51% over the past six years. The current rate of price increase has slowed, but given the strong demand, the segment is likely to experience a further upward trajectory in the near future.
Vo Hong Thang, Director of DKRA Group’s Consulting and Project Development Services Division, has asserted that the appeal of land parcels is difficult to diminish in the long run. Investors favor the segment for various reasons, including the preference for land-connected homes, the desire for safe asset accumulation, and the still-favorable potential for profit generation from land parcels.
He emphasized that based on cyclical research data, a land rush may reoccur in 2025-2026. The current period through the first half of 2024 can be seen as the initial phase of a new cycle of recovery and growth in the real estate market.
Echoing this view, Le Bao Long, Chief Strategy Officer of Batdongsan.com.vn, stated that peri-urban land is the most sought-after real estate type in 2024. The survey indicates that the price segment below 2 billion VND per plot attracts the highest interest, accounting for 42%. The 2-4 billion VND range follows with 24%, while the 4-6 billion VND range accounts for 10%. The remaining price ranges of 6-10 billion VND and above 15 billion VND have interest levels of 9% and 15%, respectively.
“From the second half of 2024, the land parcel segment will recover, and a vigorous surge may occur in 2025-2026,” he affirmed.
Currently, despite the land market not having fully regained its momentum, it remains a “favorite” for investors. The segment offers ease of investment and high profit-generating potential.
However, this segment will not experience the same level of fervent activity as in previous bull markets. Transactions are expected to be limited to certain areas and not widespread. The land market is only projected to enter a price appreciation cycle from 2025 onward.
