Land prices in a whirl in 2021
14:43
Prices at land auctions in the last months of the year
have been climbing to new highs.Prices at land auctions in the last months of the year have been climbing to new highs Many land
auctions were held within a short time in localities and the winning prices
were several times higher than the starting prices, which were already high. The auction
of 25 land plots in X4 area in Mai Dich Ward in Hanoi was organized with
800-900 participants. The starting price was very high, nearly VND200 million
per sq m, but the winning prices were 2-2.6 times higher. B12 land
plot, 44.5 sq m, facing Duong Khue street had the highest starting price of
VND182.3 million per sq m, while the winning price was VND364.3 million,
nearly twice as much as the starting price. The auction
of 18 land plots in Quang Loc commune in Ha Tinh province attracted 100
registrants. All the plots were sold, bringing VND17.5 billion, or VND7
billion higher than the initially estimated amount. Some land
plots had the starting price of VND685 million and sold for VND1.3 billion. In Bac
Giang, the highest winning price at a recent land auction was VND8.3 billion,
paid for the land plot with an area of 150 sq m, or VND55 million per sq m.
Most land plots had selling prices higher by VND1 billion than the starting
prices. Most
recently, the HCM City real estate market was stirred up by the news that the
four land plots in Thu Thiem urban area were sold at VND37.346 trillion in
total. Ngoi Sao
Viet Real Estate Co Ltd, a subsidiary of Tan Hoang Minh, paid VND24.5
trillion to acquire the 3-12 land plot, 8.3 times higher than the starting
price. With the average price of VND2.4 billion per sqm, this land plot was
among the most expensive in the world. Meanwhile,
the 3-5 land plot was sold to Dream Republic for VND3.82 trillion and 3-8
plot to Sheen Mega, VND4 trillion. A financial
expert said he could not understand why Tan Hoang Minh accepted to pay such a
‘mountain’ of money just to acquire a land plot. If Tan Hoang
MInh could borrow money equal to 70 percent of the asset value, or VND17.150
trillion, the group would have to pay trillions of dong a year in interest.
“I can
explain the move of the realtor,” he said. Surfing investors Analysts
have warned of the problems caused by ‘surfing investors’, i.e. the ones who
buy land just to resell for profit, not to develop projects. He said that the
‘surfing’ will leave negative consequences to the market and state
management. Once
investors pay overly high prices, they will break the market prices and
prevent investors who really want to develop projects from accessing the
land. If the surfing investors finally change their plan and not pay money,
this will affect the localities’ budget collection plans. Nguyen The
Diep, Deputy Chair of Hanoi Real Estate Club, said that provincial budgets
recently showed high revenue from land auctions, if considering the land
prices. Some winners even sold the land plots later at higher prices. “The surfing
investor may pocket a profit of VND50-150 million a plot,” he said. Diep said
that at some land auctions, investors collude with brokers to inflate the
prices. They even hire people to come to the auctions and offer high bid
prices to fabricate artificially high prices. The high bidding prices will
push the local land prices up. Meanwhile,
VAR (Vietnam Association of Realtors) Chair Nguyen Van Dinh thinks the high
prices of land plots at the auctions will create a new price floor in the
market. If so, realtors will have to pay more to compensate people for site
clearance, and the project development costs will also increase. HOREA (HCM
City Real Estate Association) Chair Le Hoang Chau has warned of the risks
from the sky high prices, saying that the plan to stabilize the housing
market in HCMC will fail completely as the land price has become more
expensive. Realtors will find it difficult to find cheap land to develop
affordable housing projects. Chau
believes the supply of low-cost real estate products, which is in short
supply, will even be less, thus affecting market stabilization. The sky-high
land prices will prompt realtors to develop high-end projects rather than
affordable housing projects. Meanwhile,
some real estate experts warn that winners at auctions may later give up
their bids, willing to lose their deposit money. This happened at a lot
auctions this year in the districts of Tho Xuan, Quang Xuong, and Hoang Hoa
in Thanh Hoa province, and in Lang Giang district of Bac Giang. Lawyer Tran
Vi Thoai from IB Legal Vietnam said that it was necessary to strengthen management
and inspection in order to eliminate artificial fever in the real estate
market. VNN |
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