Is this a genuine "land fever" or just a "speculative bubble"?

On the night of August 19th and early morning of August 20th, 2024, the auction of 19 land plots in Tien Yen commune, Hoai Duc district, concluded with the final land price reaching 133 million VND/m2, 30 times higher than the starting price.

The auction of land plots located on the outskirts of Hanoi lasted up to 18 hours, causing a sensation across social media with images of hundreds of investors lining up and scrambling to register to participate in the auction.

Đấu giá đất vùng ven cả trăm triệu/m2: Biểu hiện — The land auction lasted until nearly 4:00 AM on August 20, 2024 (Photo: Huu Thang).

The two plots of land that fetched the lowest prices at this auction were 91.3 million VND/m2, but even so, this was still 12.5 times higher than the starting price.

This situation isn't entirely new, because less than half a month ago, the "hotbed" of land auctions in Thanh Oai also set a new price benchmark for suburban land.

The land auction held last weekend in Thanh Oai district, Hanoi, attracted thousands of participants. The highest winning bid was over 100 million VND/m2, eight times higher than the initial starting price of only 8.6 million VND/m2 to 12.5 million VND/m2.

Accordingly, the total amount of money Thanh Oai district collected from the recent auction was 404.6 billion VND, a difference of 349 billion VND from the starting price, approximately eight times higher than the initial starting price.

In Hoai Duc district, the revenue is expected to exceed 186 billion VND from the auction, more than 11 times higher than the starting price.

The land market in suburban areas before the land auction saw prices ranging from 20-30 million VND/m2.

According to a market survey conducted by Nguoi Dua Tin and a summary report from several online real estate platforms such as Batdongsan.com.vn, the asking price for land plots in Thanh Cao commune (Thanh Oai district, Hanoi) has actually been trending upwards in recent years.

However, the average asking price for land in this area has only increased by about 80% in the past four years – from a common price of 15 million VND/m2 in 2020 to 27 million VND/m2 in 2024 – and there hasn't been a sudden surge of several tens of times like the price at the aforementioned auction.

Thus, compared to the common asking price of 27 million VND/m2 in the second quarter of 2024, the winning bid prices of 63-100 million VND/m2 for land plots in Thanh Cao commune in the auction on August 10, 2024, were 2.3 to 3.7 times higher.

In neighboring areas of Thanh Oai district, prices also fluctuate within the range of 20-30 million VND/m2.

In the Tien Yen area of Hoai Duc district, Hanoi, the most common asking price for land plots in Q2/2024 was only 43 million VND/m2, with a growth rate of over 48% in the past year.

However, the land prices at the recent auction were still two to three times higher than the prevailing market price.

For neighboring areas in Hoai Duc district, prices also ranged from only 22 to 62 million VND/m2 in Q2/2024.

Soaring land prices are a sign of "thirst" in the market.

Commenting on the situation, Mr. Nguyen Quoc Anh - Deputy General Director of Batdongsan.com.vn - said that from the second quarter of 2025 onwards, land prices will begin to enter the main recovery trend. The current price surges are only localized in certain areas.

Data from Batdongsan.com.vn also indicates that the nationwide demand for land plots increased by 33% in Q2/2024 compared to Q1/2024.

However, the expert assessed this as only a localized improvement in certain areas, particularly in the northern provinces. Hanoi witnessed a 75% increase in interest in land plots.

"In particular, the increased interest and rising prices in the areas surrounding Hanoi are due to planning factors and auction activities," Mr. Quoc Anh stated.

Specifically, in the first half of 2024, land plots in Dong Anh, Gia Lam, Hoai Duc, Thach That, and Quoc Oai districts recorded a 48% - 104% increase in search volume, leading to a 4% - 24% increase in asking prices for land plots in these suburban districts compared to the second half of 2023.

According to Mr. Nguyen Quoc Anh, there are three main factors that significantly impact the land market: the regional economy , and even the national economy at a macro level; infrastructure planning; and population growth along with connectivity to other localities.

"Besides traditional markets, in many new markets where infrastructure planning information has been announced, prices commonly increase by 10-30%, and in some places land prices have doubled or tripled in a short period of time."

"Currently, planning information is being released quite extensively on a large scale, across the country, like one large-scale project being implemented with synchronized planning. This positive information is boosting liquidity and prices in the land plot segment," the expert analyzed.

However, in analyzing the risks, Mr. Quoc Anh also emphasized that, while land prices increase based on infrastructure information, some areas see price hikes driven by demand and potential, while others experience inflated prices fueled by rumors, potentially negatively impacting the market.

From another perspective, Dr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) - believes that the land auctions attracting widespread interest and the sudden surge in prices clearly reflect the people's "thirst" for land.

In recent years, the number of projects, land plots, and real estate products with clean legal documentation has been extremely scarce, entering the market in very small quantities, and arguably almost non-existent.

Therefore, the launch of a legally compliant project, managed by the state, will attract significant interest from investors, who are willing to pay huge sums of money to acquire the land.

Hidden risks from "hoarding" land.

Although acknowledging that the surge in land prices is partly due to market demand, Mr. Dinh also reminded investors to be cautious because, despite becoming a hot spot, land transactions are not yet a segment with strong liquidity. While some areas are experiencing a boom, there are also areas where price manipulation is occurring with the intention of manipulating the market.

"It's entirely possible that investors colluded in the auction, thereby driving up land prices in the surrounding area to near the new price level in order to make a profit. Not to mention that Hanoi is a key urban area with a high population density and limited land, where the supply of real estate always falls short of demand, so it's entirely possible that investors could exploit this situation to profit."

"Whether land prices have really reached such high levels depends on whether the investors who won the auctions will actually make the payments in the future. The story of the abandoned bids at the Thu Thiem auction still remains, giving us a more realistic view of this land price surge," Mr. Dinh stated.

Noting that the high auction prices for the land will make land clearance costs for new projects even more expensive, Mr. Nguyen Quoc Anh also expressed concern that with winning bids 2 to 3 times higher than the average market price, people owning land in the surrounding area might be inclined to raise the selling price of their land accordingly.

The sudden surge in land prices can also create a trend of land speculation, as many people rush to buy land hoping to profit from the continued rise in prices.

However, this could lead to a situation where money is tied up in land, instead of being circulated in other economic activities.

According to the expert, after a period of market difficulties, the general sentiment among real estate buyers and investors will be more cautious than before.

Therefore, he recommends that buyers and investors thoroughly research the market and understand price fluctuations through objective sources of information before deciding to invest in any product.

The land auction in Thanh Oai was completely transparent and followed the correct procedures.

Following conflicting reports alleging that the implementation of the project, the determination of the starting price, and the organization of the land use rights auction for 68 plots of land in Ngo Ba area, Thanh Than village, Thanh Cao commune, Thanh Oai district, which took place on August 10th, lacked transparency, the People's Committee of Thanh Oai district has submitted a report to the People's Committee of Hanoi City on the matter.

The report states that the auction was conducted in accordance with the Land Law of 2024; the Auction Law of 2016; and the decisions of the Hanoi People's Committee regarding the issuance of regulations on auctioning land use rights for land allocation with land use fees or land lease in Hanoi.

The review revealed that a total of 1,550 customers submitted applications to participate in the auction, corresponding to 4,201 applications. Of these, 1,439 customers, corresponding to 3,923 applications, were deemed eligible to participate.

After reviewing the records and current guidelines, the People's Committee of Thanh Oai District found that all stages of the implementation process were carried out in accordance with the guidelines, ensuring objectivity, transparency, and compliance with the law. There was no evidence of land hoarding, price manipulation, or profiteering through the recent auction in Thanh Cao commune.

The People's Committee of Thanh Oai District affirms that the organization and implementation of the project, land acquisition, site clearance, infrastructure construction, determination of the starting price and selection of the auction organizer; posting of documents and organization of the land use right auction are in accordance with the law; the auction is conducted honestly, openly, transparently, fairly, and objectively.

Customers bid according to their needs and market conditions; the auction is conducted according to proper procedures, under the supervision of law enforcement agencies and the public.

Source: https://www.nguoiduatin.vn/dau-gia-dat-vung-ven-ca-tram-trieu-m2-bieu-hien-con-khat-dat-hay-chi-la-sot-ao-204240820122958289.htm