**Real Estate Market Rebounds: Land Prices on the Rise**
Two years ago, the real estate market faced a downturn, with most segments, especially land plots, experiencing low liquidity. As the market weakened, many investors holding real estate feared prices would plummet. Conversely, those holding cash were hesitant to invest, fearing they would overpay. However, the market has recently shown signs of recovery, with land prices in some areas starting to rise again.
According to the Vietnam Real Estate Brokers Association (VARS), several regions have recorded a “dramatic” increase in land transactions, particularly for subdivided plots. More investors are “hunting” for land in areas on the outskirts of major cities, areas with strong infrastructure development, and high urbanization rates.
Transaction prices for land have declined by 20-30% compared to the peak of the fever, but they have stabilized and are no longer showing signs of decline. Compared to the fourth quarter of 2023, prices have increased by about 5%, with the market in the outskirts of Hanoi and areas connected to industrial zones recording an increase of 10-20%.
Currently, land prices in some areas have started to rise, indicating that investors who previously waited have missed the opportunity to buy at the best price. However, there is still an opportunity for investors to purchase at a bargain price in preparation for the new cycle.
Dr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association (VARS), believes that the first half of the year presents a “once-in-a-lifetime” opportunity for experienced and professional investors to acquire valuable assets. Long-term investments made within the next 3-5 years will yield high returns.
“From the third quarter of 2024, the market will start to recover. At that point, opportunities to purchase real estate at the bottom of the cycle will be scarce, if not non-existent. Therefore, the first two quarters of 2024 represent the ‘final wave’ in real estate’s 10-year rise and fall cycle for investors to seize the opportunity to invest,” Dinh predicted.
Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn for the Southern region, said: “At the end of 2023, when assessing the real estate market’s potential for recovery, we predicted that land plots would be one of the slowest segments to recover and would take more time to regain liquidity compared to apartments, private houses, and townhouses. However, the ‘spring’ for land plots is likely to arrive sooner than the market expected.”
Mr. Le Bao Long, Chief Strategy Officer of Batdongsan.com.vn, emphasized that real estate prices are highly likely to increase once the new laws take effect. The new provisions in the three laws will enhance the accuracy of land price updates. For instance, Article 159 of the 2024 Land Law eliminates the land price framework and requires updating land price tables annually (instead of every five years).
Firstly, the Government has stipulated that land price tables should be determined by provincial People’s Committees (previously, the price framework had to be consulted), which are updated annually. This grants more power and responsibility to local authorities. As a result, land prices will be guided to align more closely with the specific conditions of each locality than before.
Secondly, a new pricing methodology has been introduced. Previously, the market had five land pricing methods, but under the new law, the deduction method is eliminated. The remaining four methods, such as comparison, income, surplus, and land price coefficient, have also been subject to more detailed regulations regarding their implementation. These specific provisions will make land pricing more transparent, clear, and in line with reality.
Thirdly, the amended law includes detailed conditions for issuing land use right certificates for land plots currently in use without a sổ đỏ land certificate and not involved in any disputes. A large number of land products of this type are currently pending on the market, and when their legal status is cleared, it will undoubtedly provide liquidity and better price increases. This applies not only to these land products but also to other types of real estate in the same area.
Based on these three points, Mr. Le Bao Long predicts that real estate prices will rise after 2025. Land plots will be the most affected type due to the additional impact of the ban on subdivision and sale of land plots in 105 cities and towns.
Regarding this restriction on subdivision and sale of land, many real estate experts believe that the land market will experience major fluctuations in the next year. The restriction will lead to a shortage of supply, which could drive up prices.
