The Property Market Heats Up: Buyers Flock to Provincial Land

A Warming Market

More than two years ago, Mr. Tran Hoang Anh, an investor from Hanoi, poured over 30 billion VND to purchase a plot of land adjacent to an inter-provincial road, located near an urban area in Yen Phong district, Bac Ninh province. Even though he bought it during a land fever, with the current price level, if sold, he would still profit by about 1 billion VND.

Mr. Hoang Anh shared that he bought the land in early 2021 – a time when the market was booming. There was a time when the price of this land lot reached nearly 5 billion VND, but then the market cooled down, and there were no buyers for the land.

However, recently, especially since August 2024, when the Land Law took effect, the land market in Bac Ninh has shown signs of warming up again. “Currently, my land lot has attracted the interest of many investors, and someone has offered to buy it for 4 billion VND, earning me a profit of 1 billion VND. Nevertheless, I do not intend to sell it at this moment because the price might increase even higher in the future,” said Mr. Hoang Anh.

Similarly, Ms. Le Thi Man, an investor from Hanoi, shared that since the beginning of July, she has started looking for land in Van Giang district, Hung Yen province, to ride the investment wave. Her priority is on areas with beautiful locations, priced at 2-3 billion VND, with clear legal status, and located along inter-communal roads.

According to Ms. Man, the investment wave in Hanoi is starting to subside as prices have been pushed too high. Therefore, the provinces surrounding Hanoi will surely see a resurgence in investment.

“The two land lots I purchased in August for 5.2 billion VND have now been sold for 6.8 billion VND. Recently, beautiful land lots in Van Giang only need to be advertised for a few days before being snapped up. The market is gradually warming up, and many investors are starting to flock to these markets,” Ms. Man said.

The Trend of Money Flow Heading to Suburban Areas

According to real estate hunters, the warming up of land markets in many provinces surrounding Hanoi can be attributed to several reasons. Firstly, with the Land Law in effect, the subdivision and sale of land in provincial areas will be restricted in the coming time.

Clean legal land in more distant areas will become increasingly scarce, especially for lots with existing residential status. This is due to the new land use tax rates, which will be applied nationwide after 2025, making the cost of converting to residential status very high, possibly accounting for 50% to 70% of the market price. This makes the existing land products in the market more attractive and is also one of the factors driving up prices.

Additionally, after two years of stagnation in the real estate market, many investors have chosen to put their money in savings to protect their capital. However, now that the market is assessed to have entered a new growth cycle, they tend to withdraw money from savings to invest in real estate, hoping for higher profits.

Moreover, the significant decrease in interest rates is also one of the reasons driving up the heat of the land market. Previously, savings interest rates could reach 8% – 10% per annum, but in the past year, these rates have dropped significantly. As a result, many investors no longer prefer to keep their money in savings and instead turn to other investment channels.

Commenting on this issue, Mr. Le Dinh Chung, CEO of SGO Homes Real Estate Investment and Development Joint Stock Company, analyzed that when Hanoi’s land and housing prices rise, the investment demand will not increase significantly in the coming time. Currently, customers with 5-10 billion VND in hand almost have no opportunity to invest in the Hanoi market.

According to Mr. Chung’s observation, since May, the trend of money flow has been heading to the suburban areas of Hanoi, such as Bac Ninh, Bac Giang, Hung Yen, and Hai Duong. Regarding the provincial markets, Mr. Chung believes that land will recover because it remains the preferred choice of investors.

With the investment shift to suburban areas, the real estate supply in these areas will become more diverse, ranging from land plots, apartments to projects of adjacent houses and villas. This provides investors with more options and caters to the diverse demands of the market. Although there is an investment shift, the real estate prices in the suburban areas are expected to increase but remain reasonable compared to the central areas. This stability will attract more investors.

“The investment shift to suburban areas in the second half of 2024 is an inevitable trend due to factors such as pricing, legal regulations, and infrastructure development. The suburban areas have the potential for sustainable development thanks to well-planned and synchronized infrastructure development. This not only enhances the value of real estate but also improves the quality of life for residents,” Mr. Chung shared.

Sharing the same viewpoint, Mr. Le Xuan Nga, CEO of BHS Real Estate Company, also believes that in the past, Hanoi’s land and housing prices increased sharply due to the concentration of money flow within the city center.

Mr. Nga also stated that the competition in Hanoi would be fierce, and only large-scale investors with an investment budget of 15 billion VND or more could afford to play. Smaller investors would seek to move to other provinces and regions. Therefore, sooner or later, the money flow will move out of Hanoi, possibly by the end of 2024 or early 2025. This has also happened in previous real estate cycles.