The Heat is On: Land Auction Frenzy Returns

Recently, the real estate market in the suburban districts of Hanoi, particularly in the outlying areas, has been hotter than ever, with land auction sessions continuously selling out. The successful bidding price in one session keeps breaking records set by the previous ones.

Twice to thrice the price of neighboring areas

Specifically, on July 28, the Dan Phuong Land Development Fund Center successfully organized an auction for 85 land plots, including a plot that reached a bidding price of 100 million VND per square meter, twice the starting price. On August 10, the auction of 68 land lots in Thanh Oai district attracted 7,000 participants, with one lot sold for over 100 million VND per square meter, surprising many.

And most recently, a record-breaking auction in Tien Yen commune, Hoai Duc district, lasted for almost 19 hours, from August 19 to 4:30 am on August 20. According to the organizers, the auction of 19 land lots in the Long Khuc area of Tien Yen commune attracted 517 customers who registered 1,100 sets of documents. This auction was tense, exciting, and exhausting for both the organizers and the bidders. Many people left early because many land lots were returned with extremely high prices, in a “hit or miss” or “must-buy” attitude.

While investors were bidding, real estate brokers outside the auction went live on social media platforms to report the atmosphere around the auction area, speculating and inflating prices.

As a result, plot LK03-12 (a three-sided corner lot) with an area of more than 113 square meters was bid up to 133.3 million VND per square meter, more than 18 times the starting price (7.3 million VND per square meter). The remaining plots were won with prices ranging from 97.3 to 127.3 million VND per square meter, with the lowest winning bid at 91.3 million VND per square meter.

Some brokers present assessed that the winning bid prices were much higher than the current market price in the locality. These are also record-high prices for a suburban district of Hanoi.

Continuing on the morning of August 20, after the auction ended, many real estate brokers were still active in the auction area of Long Khuc village. Some brokers said that the land lots after the auction were being resold at a premium of 300-500 million VND, depending on the area and location. “The winner of plot LK03-12 (the three-sided corner lot) with an area of more than 113 square meters, won at 133.3 million VND per square meter, is offering to resell at 300 million VND. Meanwhile, the two plots with the lowest winning bid of 91.3 million VND per square meter are being offered for resale at 600 million VND each,” said a broker.

Mr. Dinh Minh Tuan, Southern Region Director of Batdongsan.com.vn, assessed that the high land auction results would make site clearance costs for new projects more expensive. At the same time, locals who own land in the surrounding areas will have the psychology of pushing up the selling price of their land. The sudden high land price can also create a trend of land speculation, as many people rush to buy land in the hope of profiting from further land price increases. However, this can cause money to stagnate in land instead of circulating in other economic activities.

According to Mr. Tuan, the price history tool of Batdongsan.com.vn shows that the winning bid price of the 19 land plots in the LK03 and LK03 areas of Tien Yen commune, Hoai Duc district, is twice to thrice the popular market price.

Is there something unusual?

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association (VARS), assessed that since the end of last year, many real estate segments in Hanoi have continuously increased in price, especially apartments, which are stable at a high level (reaching nearly 60 million VND per square meter and tending to stabilize) causing a significant decrease in investment profit margins. For the low-rise segment in some housing and urban areas, the price is also in the range of several hundred million VND per square meter. Therefore, many investors have a demand to shift to land in the suburbs, especially auctioned land.

According to Mr. Dinh, with the new laws related to real estate taking effect from August 1, tightening the subdivision and sale of land plots, the demand for finding land in the suburbs has become more vibrant. Especially, the information that some districts of Hanoi are expected to become new urban districts in 2025 has affected the psychology of both locals and investors, leading to the scene of thousands of people participating in land auctions, while many auctions at the end of 2023 were deserted, and even some land lots had to postpone the auction time due to a lack of participants.

Talking to the press, Prof. Dr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said that the auction price of land in the suburban districts of Hanoi, 30-40 km from the city center, being pushed up to more than 100 million VND per square meter, is unusual. The land price in the suburbs is being pushed up to a high level that people’s lives cannot afford.

Attorney Nguyen Van Hai (Hanoi Bar Association) said that land auctions are expected to bring immediate benefits to the local budget, but if not strictly managed, they can cause many negative consequences. The obvious lesson in recent years has been that pushing up land prices not only disrupts the market but also creates conditions for speculators to push land prices up to make a profit, potentially creating an unsustainable real estate bubble.

Dr. Tran Xuan Luong, Vice Director of the Institute for Research and Evaluation of the Vietnam Real Estate Market, also assessed that the high winning bid prices of auctioned land in the suburban districts of Hanoi, such as Thanh Oai and Hoai Duc, are partly due to speculation and price manipulation by speculator groups. By observing recent auctions, there are groups of investors from Hai Duong, Bac Ninh, Bac Giang, etc., participating in the auction and bidding high prices. This is a factor that will push housing and real estate prices up in the coming time, making it difficult for people with real needs to access. Therefore, Dr. Tran Xuan Luong proposed that to prevent speculation and price manipulation, the deposit amount should be increased to 50% of the initial value, and auctioned land must be held for 1-2 years before being bought, sold, or notarized. If transferred within this period, high taxes should be imposed…