“Real Estate Brokers and Investors Use Thanh Oai Auction Info to Hike Prices, Making Hanoi’s Property Market Even Hotter”

Nearly 2,000 people attended the auction of 68 land plots in Ngo Ba, Thanh Than village, Thanh Cao commune, Thanh Oai district. As a result, the winning bid prices ranged from VND 63-80 million per square meter, with the highest plot reaching VND 100.5 million per square meter. Compared to the starting price of VND 8.6 – 12.5 million per square meter, the winning bid was 5-8 times higher.

Mr. Hung, a real estate broker in Thanh Oai, said: “The winning bid prices at the auction of the 68 land plots are unprecedented in Thanh Cao commune. In fact, land in Thanh Cao is traded around VND 25-35 million per square meter, with some beautiful plots reaching up to VND 40 million per square meter.”

According to data from Batdongsan.com.vn, the most popular asking price in Thanh Cao in the second quarter of this year was VND 27 million per square meter. Over the past 5 years, the highest asking price ever recorded in Thanh Cao was VND 48 million per square meter, which occurred during the land fever peak in the first quarter of 2022.

The auction in Thanh Cao commune took place amid growing interest in land auctions in the outskirts of Hanoi. Since the beginning of the year, several districts such as Dong Anh, Me Linh, Quoc Oai, and Dan Phuong have successfully held auctions with winning bids 1.5-2 times higher than the starting price. In some districts located 20-30km from the center of Hanoi, the highest winning bid reached VND 100 million per square meter.

So, was the winning bid at the Thanh Cao (Thanh Oai) auction unrealistic? Was the auction a gimmick by some investors and brokers?

Mr. Tran Minh, a personal real estate investment and management consultant, said, “The auction had 68 land plots, but nearly 2,000 people participated, and the starting price was low. Anyone who wanted to participate had to pay VND 145 million per plot to be eligible to bid. It can be seen that those with a genuine need for housing or investment were willing to put down money to participate in the auction, so it cannot be said that the prices are unrealistic. The fundamental principle is that when there is limited supply and high demand, prices will increase, and that is the nature of auctions.”

Mr. Minh believes that whether or not it was a gimmick can only be known by those who actually put down money to bid. Professional bidding teams consider bidding as a profession and a way to make money. They will bid in teams, drive up prices, and sell at a premium. If they are unable to sell at a profit during the initial period after winning the auction, they will forfeit their deposit.

“There are also cases where they have already bought multiple plots of land in the area surrounding the auction site. In this case, they will deliberately bid up the price and accept the loss of their deposit to create a new price benchmark for the surrounding area. This allows them to sell their other land holdings at higher prices,” Mr. Minh shared.

However, Mr. Minh warned of a more dangerous scenario: “After the land price in Thanh Cao reached VND 100.5 million per square meter at the auction, many brokers and investors in Hanoi used this information to compare and justify increasing the prices of other projects in the area, further fueling the real estate market in Hanoi.”

Mr. Minh acknowledged that the potential for short-term price increases in the auction area is limited, as it only serves the housing and investment needs of residents in that particular area. There are no significant development plans in the surrounding area that would attract outsiders to move in and drive up prices.

“Land prices in Thanh Oai district are generally lower compared to other districts in Hanoi. Thanh Oai is an outlying district that has not yet seen significant infrastructure and service development like the districts closer to the center, such as Gia Lam, Dong Anh, or Hoai Duc. This results in lower land prices in Thanh Oai, making it attractive to those looking for affordable land or long-term investment opportunities,” Mr. Minh explained.

An experienced investor pointed out that with the recent enforcement of new real estate-related laws, which are expected to tighten the land supply, some investors may be rushing to acquire land in anticipation of future price increases.

According to a report by the Vietnam Real Estate Brokers Association, the land segment in Hanoi’s outlying districts has been heating up again in the first half of 2024. However, while land transactions have increased, the market is not yet truly vibrant, with some areas showing genuine signs of heating up while others exhibit signs of price manipulation.

Many experts also caution that when the land market is active, land auctions become a new form of speculation instead of providing additional supply to meet the housing needs of the people. Therefore, investors and those with genuine housing needs should exercise caution.