Recently, the proposed merger of provinces and cities has attracted significant attention from real estate investors. Many investor groups have begun a "land hunt" in areas expected to become merger centers, hoping to benefit from this change.
However, experts from the Vietnam Real Estate Association (VARS) warn that this move poses significant risks for investors.
According to updated information from members of the VARS Market Research Task Force in various localities, just a few weeks after the announcement of the proposed provincial-city merger, land prices in some areas have increased sharply, in some places by up to 20%. However, the increase in transactions is mainly concentrated in areas predicted to be merger centers, where real estate prices are not yet excessively high.
The history of Vietnam's real estate market shows that whenever there is information about new urban planning, land prices in the affected areas often increase sharply in the short term. The main reason is the FOMO (fear of missing out) mentality of investors. They rush to invest with the belief that this change will lead to economic and social development, thereby boosting real estate values.
Although the decision to merge provinces and cities may have a positive impact on the real estate market, many investors cannot avoid the risk of making land purchase decisions based solely on "rumors." While it is predicted that adjustments to land price tables may indirectly boost land prices, in reality, most of these price increases are speculative in nature and lack a solid foundation.
Even with administrative changes related to mergers, this does not necessarily mean that the area will immediately experience rapid development. This is especially true given that real estate prices have risen significantly relative to the incomes of most people in recent times, making it easy for many investors to make mistakes when deciding to buy land.
A prime example is when news broke about some suburban districts in Hanoi or Ho Chi Minh City being upgraded to urban districts, land prices skyrocketed. However, after the boom subsided, areas lacking proper infrastructure investment quickly experienced a "bursting bubble," with land prices plummeting.
VARS believes that the merger of provinces and cities could bring some benefits to the real estate market, especially by reducing legal procedures and creating more supply for affordable housing. However, for sustainable real estate value growth, synchronized development of transportation infrastructure, economy, and society is necessary.
Infrastructure projects such as major roads, metro systems, schools, and modern urban areas will be crucial factors in ensuring stable market development.
Land speculation based solely on information without actual infrastructure development investment is often short-lived. Therefore, investors need to be especially cautious and should not simply follow "rumors" without thorough research.
Experts warn that land price surges typically only benefit a small group of speculators, while the majority of individual investors and genuine homebuyers may be trapped by excessively high land prices. After each surge, many investors have had their capital tied up or have had to sell at a loss due to poor liquidity. Even experienced "short-term" investors have failed numerous times when they failed to sell their properties in time.
VARS experts advise that, to avoid falling into speculative bubbles, investors need to remain level-headed and avoid being swept along by herd mentality. Thoroughly researching land prices in the area where investment is planned, understanding planning information, and assessing the progress of infrastructure projects are extremely important.
Buying when prices have already risen sharply carries significant risks, and only areas with clear planning and integrated infrastructure are safe choices for long-term investors.
Given the complex developments in the real estate market related to the proposed merger of provinces and cities, investors need to exercise extreme caution. Investing in areas with clear development potential and well-developed infrastructure will be a safer and more sustainable choice. Avoid speculative land bubbles to protect capital and ensure long-term profits.
Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/canh-bao-nha-dau-tu-bat-dong-san-khong-chay-theo-tin-don-sap-nhap-tinh-thanh/20250320113845394
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