Home Real Estate The Shocking Auction Aftermath: Thanh Oai Land Prices Drop to 20 Million,...

Real Estate

The Shocking Auction Aftermath: Thanh Oai Land Prices Drop to 20 Million, New Listings Start at 8 Million VND per Square Meter

15 August, 2024

Plots of land with an area ranging from 74.63 to 134.69 square meters are up for auction. A uniform incremental bid of VND 100,000 per square meter is applied to these plots.

The auction is planned to take place at the Thanh Oai District’s sports stadium. With a starting price of VND 8.097 million per square meter (excluding taxes, fees, and charges), the upfront payment for these plots ranges from nearly VND 121 million to VND 218 million.

On August 10th, Thanh Oai District organized an auction for 68 land lots in Ngo Ba, Thanh Than village, Thanh Cao commune. This auction stirred excitement among real estate investors and the public as the winning bids were seven to eight times higher than the starting price.

With starting prices ranging from VND 8.6 to 12.5 million per square meter, the highest winning bid surpassed VND 100 million per square meter. This is despite the area lacking significant infrastructure developments besides the lone Binh Minh – Thanh Cao road, surrounded by fields, a lake, and old residential areas.

This scenario contrasts sharply with the situation about a year ago when some localities struggled to organize auctions due to a lack of registrants. The high reserve prices were the main reason for the low interest.

Returning to the auction held last weekend in Thanh Oai District, the high level of interest was evident from the impressive numbers. Over 4,500 land-use right auction applications were sold, with more than 4,000 eligible applications from over 1,500 customers.

Many observers attributed the auction’s appeal to investors to the low starting price. With the above-mentioned reserve price, investors only needed to make a 20% deposit, equivalent to about VND 200 million.

In fact, for the recently auctioned lots in Thanh Oai, the initial reserve price ranged from VND 40 to 45 million per square meter, but it was unexpectedly lowered to just over VND 10 million per square meter.

The auctioned land in Thanh Oai District saw a starting price of VND 8.6-12.5 million per square meter, with the highest winning bid surpassing VND 100 million per square meter. Photo: Hong Khanh

Explaining the sudden drop in the reserve price, Mr. Nguyen Cong Quang, Director of the Land Fund Development Center of Thanh Oai District, said that previously, the authorities had hired consultants to determine the reserve price for the land auction in Ngo Ba, Thanh Than village, Thanh Cao commune, Thanh Oai District, which was set at VND 40-45 million per square meter.

Initially, this price was expected to be applied to the auction scheduled for March. However, in February 2024, the government issued a decree amending and supplementing a number of articles of Decree 44 (guiding the implementation of the 2013 Land Law), which changed 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 frame.

“As the local land price frame is low, the reserve price is also low, ranging from VND 8.6 to 12.5 million per square meter,” said Mr. Quang.

According to the director of a real estate company in Hanoi, within 30 days of winning the auction, the winner must make the full payment, which could amount to several billion VND per lot. “If it’s an investor who doesn’t intend to live there but only wants to flip the property for a quick profit, they might forfeit the deposit, losing about VND 200 million. Perhaps we’ll have to wait another month after the land use fee payment deadline to see how things unfold,” he said.

The director also added that if the price is too high compared to the market, the market will self-correct. This can already be observed in the rapid decrease in premium prices in Thanh Oai.

Up to now, some information about the reselling of the auctioned lots has shown a decrease in premium prices to around VND 100-200 million per lot, and some lots are even advertised with a premium of only VND 20-30 million.

Immediately after the auction, the premium prices were commonly quoted at VND 200-500 million per lot.

Experts hope that the amended Law on Auction of Assets, which will take effect from the beginning of 2025, will help prevent bid withdrawals and price manipulation in auctions. According to the new regulations, if a winner of a land auction withdraws and causes the auction result to be invalidated, they will be banned from participating in auctions of that type of asset for a period of 6 months to 5 years, depending on the nature and severity of the case.

Upcoming land auctions in districts near Hanoi with a starting price of VND 7.3 million/m2

According to the plan, on August 19, Hoai Duc District will auction 19 land plots in Long Khuc, Tien Yen commune. The area of the plots ranges from 74 to 118 square meters, and the starting price is VND 7.3 million per square meter.

Then, more than a week later, on August 29, Phuc Tho District will organize an auction for 30 land plots in Doc Tranh, Trach My Loc commune, and 9 plots in Dong Phuom, Tho Loc commune. The auction is expected to take place at the Phuc Tho District’s Culture, Information, and Sports Center.

In Doc Tranh, the land plot area ranges from 96 to 148 square meters, with a starting price of VND 23.4 million per square meter.

Meanwhile, in Dong Phuom, the land plot area is uniform at 134 square meters, and the starting price is VND 19.8 million per square meter.

In Soc Son District, the People’s Committee has issued a decision on the auction of land use rights for 16 land plots in Dam Ngai, Xuan Lai village, Xuan Thu commune. The plots range in size from 110 to 220 square meters.

The District’s Land Fund Development Center is in the process of determining the reserve price and incremental bid. The auction is expected to take place in August 2024.

Hong Khanh