On August 10, Thanh Oai district organized an auction for 68 land lots in Ngo Ba, Thanh Than village, Thanh Cao commune. The land is located on Binh Minh – Thanh Cao road, a two-lane road (connecting National Highway 21B and the dike of the Left Red River), more than 30km from the city center and about 15km from Ha Dong district center.
Deliberately pushing land prices high in auctions will have many consequences
This auction caused a stir among real estate investors and the public when the winning bid was 7-8 times higher than the starting price. With a starting price of VND 8.6-12.5 million/sqm, the highest winning bid exceeded VND 100 million/sqm, while the infrastructure in this area has not seen significant improvements. More than 4,500 land use right auction dossiers were sold. About 4,000 dossiers met the requirements, with over 1,500 customers.
On August 19, at the Culture – Information and Sports Center of Hoai Duc district, 19 land plots with an area of 74 – 118 sqm in Lang Khuc village, Tien Yen commune, Hoai Duc district were also put up for auction with a starting price of VND 7.3 million/sqm. After 19 hours (from 8 am on August 19 to almost 5 am on August 20), with 9 rounds of bidding, the auction finally ended with the highest land price reaching VND 133.3 million/sqm, more than 18 times the starting price. Meanwhile, the two lowest winning bids were VND 91.3 million/sqm.
Before Thanh Oai and Hoai Duc, on July 28, 85 land lots in Dan Phuong district were auctioned, with 1,252 participants, a ratio of 14.7 dossiers/lot. The most shocking winning bid was VND 99.2 million/sqm, more than twice the starting price.
Explanation
Regarding the reason for the recent “fever” of auction land in some suburban areas of Hanoi, real estate experts said that the root cause is that some suburban districts are about to become new urban districts and are promoting investment in infrastructure.
Mr. Pham Duc Toan, General Director of EZ Vietnam Real Estate Investment and Development Joint Stock Company, said: “One of the immediate consequences of this land auction fever is the price manipulation to create a new price level to sell the land plots in the same area at a higher price”. This situation will have long-term consequences, including an unrealistic new price level. If the auction winner does not pay the deposit and full payment, the market will have to face the consequences.
Many inter-district and inter-communal roads have been widened and asphalted, giving the rural areas a new look. Especially, the Ring Road 4 around the center of Hanoi is taking shape, promising great potential for economic development. Meanwhile, in the past few years, the real estate market has been lacking in new supply, and apartment prices have increased. In terms of policies, since August 1, the real estate-related laws that have taken effect have tightened the subdivision of land for sale. This has led investors to look for land products in the suburbs with tight legal procedures and prices of about VND 3 billion/lot. This is also the reason why land auctions have become “hot” again recently.
Ms. Do Thi Hong Hanh, General Director of Lac Viet Partnership Auction Company, said that there are three main reasons for this situation. First, the low starting price attracts many participants. Second, the deposit amount is low. Third, about 70% of the participants are investment groups who buy land at a low price and then sell it at a higher price. According to Ms. Hanh, these groups have a lot of experience in land auctions. After winning the auction, they will sell the land at a higher price to make a profit. Outside the auction area, there are already people waiting to buy the land, and many brokers are ready to buy and sell land with a price difference of VND 200 – 500 million/lot.
Dr. Tran Xuan Luong, Vice Director of the Institute for Real Estate Research and Evaluation in Vietnam, said that land auctions are becoming a prominent issue as land prices are often pushed up much higher than their actual value. According to Dr. Luong, there are many reasons for this situation, with many tricks behind the auctions. “One of those tricks is the tactic of speculator groups from other places. These groups participate in auctions with the aim of pushing up land prices and then quickly selling them at a high premium. They have no intention of developing the land but only wait for opportunities to make short-term profits, causing market volatility and creating difficulties for those with real demand,” said Dr. Luong.
According to Dr. Luong, when land prices are pushed up unreasonably, the real estate market is easily pushed into a “bubble” state. The value of land is inflated far beyond its actual value, creating a “bubble burst” risk when the market adjusts. At this point, all risks from the “price trap” will be borne by investors.
The Capital’s New Land Pricing Criteria: Unveiling Hanoi’s Latest Regulations Effective September 16th
The Hanoi authorities have outlined specific land price determination procedures within its jurisdiction, effective from September 16th.
The Capital’s New Land Pricing Criteria: Unveiling Hanoi’s Latest Regulations Effective September 16th
The Hanoi authorities have outlined specific land price determination procedures within its jurisdiction, effective from September 16th.
Unveiling the Strategies of Land Auction Speculators
The Hanoi land market witnessed an unprecedented surge in August, with auction prices skyrocketing and consecutive sell-out sessions. Speculators employed tactics to manipulate land prices, creating a frenzied atmosphere in the outlying districts. This phenomenon has ignited a “fever” in the land foundation market, with each auction outbidding the previous one.
“Rain or Shine: Hanoi’s Outskirt Notary Offices Remain Buzzing with Clients”
In spite of the recent inclement weather, with heavy rains causing flooding in the area, many customers braved the elements to visit the notary public offices and branches of the land registration office in the outlying districts of Hanoi. They were there to complete their real estate transactions, a testament to their determination and the importance they placed on finalizing these property deals.
The Capital’s Alleyway Property Boom: Intra-Hanoi Real Estate Prices Surge Past 150 Million VND per Square Meter, Matching Suburban Villa Premiums
“Houses in alleys priced at 3-4 billion VND are gradually disappearing as land prices have surged, with the average now exceeding 100 million VND per square meter in areas on the outskirts of the third ring road and 150 million VND per square meter in inner-city districts,” said Mr. Tran Duc Khang, Regional Sales Director of OneHousing Region 2.
