The Calm Before the Storm: Will the Land Market Ever Fully Recover?

Ms. Thai An, a real estate investor from Hanoi, shared that she bought two land plots in Bac Giang at the peak of the market in early 2022. By early 2023, the value of each plot had dropped by 50%. Despite the loss, she decided to hold on to the plots instead of selling at a loss.

“Since the beginning of the year, land prices in the area have recovered somewhat, but they are still about 30% lower than during the peak. I think I’ll need to hold on to these plots for at least another year to break even or minimize my losses,” said Ms. An.

According to the Vietnam Real Estate Brokers Association, many areas have witnessed a “sudden” increase in land transactions, especially for plots that have been subdivided. Transaction prices for land plots are 20-30% lower than the peak but have stabilized and are no longer declining. Compared to the fourth quarter of 2023, prices have increased by about 5%, with the market in the outskirts of Hanoi and areas close to industrial zones seeing increases of 10-20%.

While land prices in many areas have rebounded recently, it may take some time for investors who are stuck with properties to break even.

Batdongsan.com.vn also reported that interest in land in the first half of 2024 is recovering after hitting rock bottom in 2023. The level of interest in land increased by an average of 33%. Dong Anh district saw the biggest jump in interest at 104%, followed by Quoc Oai at 101%, Gia Lam at 95%, Hoai Duc at 79%, and Thach That at 48%.

The increased interest has also led to rising selling prices, with Dong Anh recording the highest increase of 24%, followed by Quoc Oai at 20%, Hoai Duc at 19%, Thach That at 13%, and Gia Lam at 4%.

Mr. Le Dinh Chung, General Director of SGO Homes Real Estate Investment and Development Joint Stock Company, shared his opinion that capital flows in the latter part of the year tend to shift towards new segments and markets, and that suburban land will be a popular choice for many investors.

Observing the market’s dynamics recently, Mr. Chung affirmed that this shift in investment preference is becoming more evident. The group of investors with financial capabilities of 5-10 billion VND has started looking for alternative investment destinations as the prices of apartments, villas, and adjacent houses in Hanoi are out of their reach.

Since May, satellite and suburban areas such as Hung Yen, Bac Ninh, Bac Giang, Hai Duong, Phu Tho, and Hoa Binh have become the focus of investors. The market is witnessing signs of recovery in the segment of products priced below 10 billion VND in these suburban areas.

In an interview with Tien Phong newspaper, Mr. Nguyen Anh Que, a member of the Vietnam Real Estate Association, shared his observations that land in the outskirts of Hanoi and Ho Chi Minh City saw strong increases in prices and liquidity in the first half of 2024, but the pace has started to slow down recently. “In the past few days, the government has taken steps to cool down this segment through media orientation, and the process of granting residential land use rights in these localities has not become more flexible. The subdivision of land plots relies solely on the existing land fund, which is very limited,” said Mr. Que.

Mr. Que added that land in the capitals of industrial parks, tourist areas, and satellite cities of first-tier cities will gradually become more liquid and see price increases due to capital flows from other segments such as apartments, inner-city and suburban houses, savings, and remittances from overseas Vietnamese. This segment is expected to rebound in the fourth quarter of 2024 and reach its peak in 2028.

Experts advise investors to be cautious as the government is tightening control over land speculation through amendments to the Land Law and the Law on Real Estate Business. As a result, while the market may recover in the future, land prices will only increase to a certain extent.

Unlike previous cycles, the new cycle is unlikely to see a “fake fever” in land prices and a rapid increase in prices. A real estate bubble is not expected to occur in the next phase.

Currently, some areas are experiencing “pushed” price increases, but these are spontaneous and localized, based on infrastructure information. Therefore, investors need to be cautious and selective, focusing on segments that can generate cash flow instead of rushing into short-term speculative transactions.