In the Southern real estate market, although the decline in land prices continues, signs of a recovery in demand are quietly taking place in some areas of Ho Chi Minh City and neighboring provinces, indicating that land plots have the potential to “reverse the trend” in the final quarters of 2024.
Land plots, which are a segment favored by investors. After nearly 2 years of market downturn, this segment has seen price adjustments in most areas. In particular, the price reduction of land in the provinces is higher than that of land in Ho Chi Minh City. This price adjustment shows that the profit expectations of investors are gradually decreasing due to the weak liquidity of the overall market. However, it will be difficult for land plots to experience another “major price drop” in the coming years, as the value and ownership sentiment of this segment remain high.
Land plots in Ho Chi Minh City are currently recovering gradually, maintaining good prices; there are also fewer cases of investors selling off or cutting losses deeply. Meanwhile, land plots in projects in some remote areas from Ho Chi Minh City such as Binh Phuoc, Binh Thuan, and Lam Dong are still quite slow.
From the first quarter of 2024, in Ho Chi Minh City, the selling price of land plots remains high, with difficulty in decreasing and even a slight increase compared to the previous period in some areas with developed economy, focusing on promoting investment in infrastructure and transportation. For land plots owned by individuals or transferred secondarily, there has been a price increase of 5-10% compared to the beginning of 2023.
Land plots in the South have shown signs of brisk trading since the beginning of 2024. Photo: Tieu Bao
The number of investors exploring the land market is increasing compared to the previous period. The level of interest in land plots in the last two quarters of 2023 was only 44%, but it increased to 48% in the first quarter of 2024. Notably, there are “whales” with strong financial resources buying up large quantities of land plots, or acquiring projects whose investors are facing financial difficulties and are forced to reduce their selling prices.
According to experts, there are currently three groups of investors aiming to acquire land plots. Among them, the first two are considered “whales” with strong financial resources, while the remaining group comprises small and medium-sized investors. Around the end of 2024, the land market may start to recover. The best recovery will likely occur in 2025. Currently, investors who use financial leverage should not participate in this segment; instead, they should prioritize having free cash flow. The market sentiment is currently entering a period of stability, with expectations that the land segment will turn positive from the second quarter of 2024 onwards.
Even during the April 30 – May 1 holiday, investors took the opportunity to visit land and houses. Photo: Tieu Bao
Recently, the passing of new regulations tightening the subdivision and sale of land in the amended Law on Real Estate Business has also been said to have a strong impact on this segment. The supply of subdivided land plots is expected to decrease significantly after 2025, but the demand for land plots will hardly decline in the long term because the Vietnamese people still prefer this type of property. When supply is low and demand is high, land prices will increase. Many investors want to capitalize on this trend and have started looking for land plots before the new law takes effect.
It is likely that a large amount of land with large areas, which was previously “held” by investors for the purpose of subdivision and plot splitting, will be sold at reduced prices. However, land plots with clear legal status and potential locations will still be attractive and priced high.
The rapid price increase and the resurgence of the real estate market are leading many to predict that a new land fever may occur, similar to the one in 2021. Recently, some opinions have stated that the time when land plots may experience a local fever will be during the 2025-2026 period.
However, some experts believe that it will be difficult for land plots to experience a fever like the previous period. Recent actions by the government, such as the draft on taxing second homes and restricting the trading of 5 houses, all indicate that investment will be increasingly tightened, rather than being as easy as before. The recent price increase in some real estate segments is not a land fever, but rather an unusual sign of a local nature in the market.
In the context of the real estate market not yet fully recovering, projects still facing obstacles, and people and businesses facing many difficulties, it will be difficult for the market to experience a land fever in the short term.
Currently, the overall recovery of the real estate market depends on many factors such as income, people’s financial flows, and confidence in the market. Therefore, experts advise investors to consider using financial leverage with a high ratio at this stage. This is because the macroeconomic environment is still facing many challenges, and policies and solutions to address these issues from the government will take time to implement and take effect.
