Explaining the unexpected reserve price, Mr. Nguyen Cong Quang, Director of the Land Development Center of Thanh Oai District, told reporters that previously, the authorities had hired consultants to determine a reserve price of VND 40-45 million per square meter for the Ngõ Ba area in Thanh Thần village, Thanh Cao commune.
Initially, this price was expected to be applied to the auction held in March. However, in February 2024, the government issued a decree amending and supplementing several articles of Decree 44 (guiding the implementation of the 2013 Land Law), which removed the method of determining the reserve price for small-scale scattered projects with infrastructure from consulting to using a coefficient K multiplied by the city’s land price framework.
“Meanwhile, the local land price framework is low, so the reserve price is also low, ranging from VND 8.6-12.5 million per square meter,” said Mr. Quang.
Auction of 68 land plots in Ngõ Ba, Thanh Thần village, Thanh Cao commune, Thanh Oai district (August 10). Photo: thanhoai.gov |
The director of the Land Development Center of Thanh Oai District assessed that, on the other hand, a low reserve price and a low deposit amount (about VND 200 million) also attracted a large number of participants and shortened the time for determining the reserve price compared to the previous regulations, which could take several months.
According to him, the reserve price is not a reference price for participants to decide their bids. The nature of the successful transaction price is determined by the market.
Mr. Quang affirmed that the auction process was carried out in accordance with regulations and that there were no irregularities.
“The People’s Committee of the district has assigned the district police to monitor and supervise the process from the sale of dossiers to the auction. If there are any irregularities, the auction will be stopped immediately. The auction was successful, open, and transparent, in accordance with the law,” said Mr. Quang.
Buyers beware of “chasing the peak”
As we have reported, the auction of 68 land plots in Ngõ Ba, Thanh Thần village, Thanh Cao commune, Thanh Oai district (on August 10) attracted thousands of registration dossiers, with the highest winning bid reaching VND 100.5 million per square meter, eight times the reserve price, arousing public interest.
More than 4,000 eligible dossiers with over 1,500 customers participated in the auction of 68 land plots. Photo: M.G |
According to the People’s Committee of Thanh Oai district, this was the district’s first auction of the year 2024, aimed at generating revenue for the district to invest in rural infrastructure and the construction of new-style rural areas and model rural areas.
The heat of the auction was evident through a series of impressive numbers. More than 4,500 land use right auction dossiers were sold. There were more than 4,000 eligible dossiers with over 1,500 customers.
The total auction revenue for the state budget was VND 404.6 billion, a difference of VND 349 billion compared to the reserve price.
Many land plots increased in price by billions of dong compared to the reserve price. The summary table shows that about 15 plots with a starting price of VND 955 million per plot increased to more than VND 7 billion per plot.
Plot LK03-10, with an area of nearly 65 square meters, had the highest winning bid of VND 100.5 million per square meter, eight times the reserve price.
Notably, immediately after the auction, “land brokers” appeared on social media groups dedicated to buying and selling land, offering to resell the auctioned plots at a price equal to the winning bid plus a premium of hundreds of millions of dong, depending on the plot’s location.
According to the brokers’ price list, the lots had a common premium of VND 200-500 million per plot. There was a plot in the LK05 area that was offered with a premium of up to VND 700 million.
When contacted, an account reselling a series of recently auctioned plots offered a premium of VND 500 million for plot LK01-4, with an area of 85 square meters, a reserve price of VND 955 million, and a winning bid of VND 7.2 billion (VND 84.7 million per square meter).
Thus, if the resale transaction is successful, the total value of the plot will be VND 7.7 billion, or VND 90 million per square meter.
Meanwhile, a survey of information posted on various real estate pages over the past three months shows that land prices in Thanh Cao commune, Thanh Oai district, have been on an upward trend, ranging from VND 18-39 million per square meter, with an average of VND 28.5 million per square meter. It can be seen that the winning auction price is still about three times the average market price.
Some opinions suggest that the plots with winning bids of VND 90-100 million per square meter are likely to have a high rate of deposit forfeiture because the deposit amount is too small. The high ‘ask’ price for these plots creates an opportunity to resell plots at VND 50 million per square meter with a premium that can reach up to several hundred million dong. Therefore, those intending to buy auctioned land plots of this type need to be cautious and consider the surrounding infrastructure and market prices to avoid “chasing the peak.”
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Thanh Oai District will auction three land areas Director Nguyen Cong Quang said that from now until the end of 2024, the district will organize auctions in three land areas, with a total area of nearly 9 hectares. Specifically, these areas include: Mang Cá (Đỗ Động commune) with 4 hectares; Mục Xá (Cao Dương commune) with 1.9 hectares; and Cưng Trong (Tam Hưng commune) with 3 hectares. The Land Development Center of the district is currently leading relevant agencies to focus on accelerating site clearance and constructing technical infrastructure for the auction areas to soon implement the auction of land use rights and ensure the completion of the plan to generate investment capital for construction. |
Hong Khanh
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