The New Property Power Players: Unveiling the Real Estate Segment with the Upper Hand in the Midst of the Market’s Buzz About Land Price Updates

With the new Land Price Framework expected to be issued in Ho Chi Minh City and three new laws taking effect on August 1st, Mr. Vo Hong Thang, Director of DKRA Group’s Consulting & Project Development Services, was asked about the real estate segments that would benefit the most from these changes. Mr. Thang acknowledged that the new laws and the upcoming framework will indeed impact the input costs of projects in the city.

As a result, completed apartment projects with reasonable prices and imminent handover in Ho Chi Minh City will have significant advantages during this transitional period. This is also an opportunity for these projects to attract buyers as the entire market is abuzz with discussions about land use charges, compensation, and taxes for new projects under the new laws.

Mr. Thang elaborated on the potential increase in project input costs, stating that it depends on the decrees, circulars, and the ‘k’ coefficient to be issued by relevant ministries, departments, and branches. However, he emphasized that higher land prices will inevitably lead to higher real estate prices.

Additionally, the new Real Estate Business Law stipulates a reduction in the deposit amount from 30% to 5% and a decrease in the payment before handover from 70% to 50%. These changes will significantly alter the capital structure of investments for businesses. As a result, enterprises will need to allocate more capital, while the proportion of capital mobilized from customers will be lower. “This indicates that the new laws are rigorously screening the market, leaving only financially capable investors,” Mr. Thang stressed.

The upcoming Land Price Framework in Ho Chi Minh City, along with the three new laws, has raised concerns about future real estate prices and supply. It is predicted that condominium projects, townhouses, villas, agricultural land, and land plots will be the most affected in terms of legal corridors, initial land processing costs, and capital mobilization expenses.

These changes will impact primary prices and future new supply. While new projects await circulars and guidelines based on the new laws, existing projects with clean land funds and land use fees already paid are considered advantageous at this stage. Additionally, enterprises with the capacity to implement projects, strong finances, and solid legal foundations will continue to thrive in this new environment.

Observations show that some completed and near-completed condominium projects in Ho Chi Minh City are benefiting from strong market demand. For instance, the Flora Panorama apartment project in the Mizuki Park urban area (in the south of Ho Chi Minh City) and the soon-to-be-handed-over Akari City project in the west of the city, both developed by Nam Long, have received positive market responses. Their reasonable prices, favorable policies, and status as one of the few completed projects in the city have contributed to their sustained popularity and sales performance.

A Ho Chi Minh City-based real estate enterprise recently shared that the new Land Price Framework, once applied, is likely to result in higher selling prices for future projects. Additionally, residents will have to pay higher fees for buying, selling, and transferring properties, with the exact amount depending on the land prices in each area as per the new framework. Meanwhile, some real estate enterprises with large land funds and those who have already calculated their land use fees are at an advantage.

“In the long run, real estate price increases will depend on various market variables, such as macroeconomic conditions, interest rates, exchange rates, and more,” said Mr. Vo Hong Thang. “However, the market is currently awaiting the degree of relief and unblocking that the three new laws will bring. This will be the key factor in the market’s recovery and will significantly influence real estate prices in the future.”