The Hanoi Department of Agriculture and Rural Development has recently drafted a proposal for the city’s first land price list, set to take effect from January 1, 2026. According to the proposal, the highest residential land price in Hanoi is expected to be over 702 million VND per square meter, applicable to areas within the former Hoan Kiem district. The most significant increases are proposed for suburban areas, ranging from 16% to 26%.
In response to the proposed land price hike, the Vietnam Real Estate Association (VNREA) emphasizes that land is a critical production input, and land prices directly contribute to the cost structure of products through land use fees, land rental fees, and compensation costs for site clearance. These factors impact both local businesses and residents.
The new land price list will influence businesses’ access to land, input costs, product pricing, and overall competitiveness. A sharp increase in land prices will also place significant pressure on public investment costs and infrastructure project timelines. Higher land costs could lead to budget overruns for key city projects, complicating fiscal balancing efforts.
Additionally, prolonged negotiations and compensation processes may delay project implementation, undermining public investment efficiency and the city’s goal of developing synchronized infrastructure in the coming years.
If land prices rise significantly, housing costs will follow suit, diminishing investment appeal, particularly for real estate projects in suburban areas. This could hinder the city’s plans to develop housing in these regions to alleviate population density in the urban core. Consequently, the housing supply may shrink further, posing challenges to social stability.
Moreover, higher land prices will strain the finances of both residents and businesses due to increased financial obligations, such as land use taxes, land-use conversion fees, and related charges. This will also burden the state budget when compensating and resettling affected parties.
Rising land prices will likely drive up rental costs as well. Rental prices near universities have already surged by approximately 30%, making it harder for students to afford housing in these areas.
In recent years, the government, ministries, and local authorities have sought solutions to reduce real estate prices. VNREA argues that aligning land prices and input costs appropriately will help lower property prices, including housing. One effective strategy is to reduce input costs that contribute to real estate pricing. However, higher land prices will increase production costs, limiting access to housing for those with genuine needs. For commercial housing projects, increased land prices will compromise feasibility, further driving up home prices.
Currently, the real estate market is in a fragile recovery phase, with many businesses restructuring and facing capital shortages. An increase in land prices at this time could impose a “double burden,” slowing market recovery.
Therefore, VNREA advocates for land pricing that enhances access to land, fosters a conducive business environment, and stabilizes land price fluctuations, particularly for non-agricultural production land. Such measures are essential for supporting investment plans, business operations, and the city’s economic development.
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