Suburban Land Auctions: Where Dreams Die and Prices Soar

On November 30, Thanh Oai District, Hanoi, held its third land auction in Van Quan village, Do Dong commune. The lots up for auction ranged in size from 85 sq. m. to over 135 sq. m., with a starting price of VND 5.3 million per sq. m., requiring a deposit of VND 90.89 – 143.84 million per lot. The 22 lots, numbered 118 – 139, had a total area of 2,209.06 sq. m.

By the eighth round, bidders dropped out, and none of the lots were successfully auctioned. The highest bid reached approximately VND 70 million per sq. m. The organizers had to cancel the auction. Other investors also noted that the auction prices were unlikely to surge further, as the land auction market is not as vibrant as it was in August.

Previously, on November 29, an auction was held for 58 land plots in Dong Lai village, Quang Tien commune, Soc Son District. The plots ranged from 90 to 224 sq. m., with a starting price as low as VND 2.448 million per sq. m. The auction attracted 285 customers with around 1,000 participants, conducted in a mandatory six-round format, with each bid increment set at VND 3 million per sq. m.

The land auction proceeded normally until the fifth round, when more than 40 plots were bid up to extremely high prices by a group of customers, with three plots reaching over VND 30 billion per sq. m. This auction was considered to have been disrupted by a group of customers engaging in “sabotage.”

Recent instability in land auctions reflects the distortion of these events by speculators who engage in deposit abandonment, price manipulation, and price collusion.

According to Mr. Nguyen The Diep, Vice President of the Hanoi Real Estate Club, these acts of bidding up prices and then withdrawing are indicative of speculation and price manipulation. While transparency is an effective measure, stronger actions are necessary to curb these practices.

“Disclosure of information may not be sufficient to address the issue. Before each land auction, the financial capacity of participants should be assessed, and they should be required to prove the source of funds if they win the auction. Additionally, tax tools should be considered to deter land auction deposit abandonment,” said Mr. Nguyen The Diep.

Lawyer Truong Thanh Duc, Director of ANVI Law Firm and Arbitrator at the Vietnam International Arbitration Center, stated that the previous Law on Asset Auction only imposed penalties and compensation limited to the deposit amount, without any additional sanctions. Setting the correct starting price is essential and aligns with international standards.

However, in Vietnam, there are too many variables and anomalies, so the National Assembly recently amended the Law on Asset Auction to include additional penalties beyond deposit forfeiture, such as temporary bans from participating in tenders and auctions and restrictions on certain activities.

“These sanctions are truly meaningful for investors, organizations, and businesses that frequently engage in tenders and auctions, as it affects their reputation and brand. However, for individuals participating in land auctions, such as those held in Thanh Oai and Hoai Duc, these sanctions hold little value. Individuals do not frequently participate in auctions, and they can even enlist others to bid on their behalf in subsequent auctions,” said Lawyer Truong Thanh Duc.