Land prices have dropped sharply after the "land fever".
The real estate market in 2023 concluded with a gloomy outlook across all segments. Segments considered suitable for speculation, such as apartments, villas, condotels, and especially land plots, witnessed sharp declines, with the highest drops reaching 30-50% in the secondary market.
A recent real estate market report by the Vietnam Association of Real Estate Brokers (VARS) shows that the land market is no longer experiencing the "feverish" conditions of the past. Land plots have undergone several price reductions, with losses of up to 30-40%, yet they remain difficult to sell. However, this reduction is understood to be compared to the peak of the boom and has not yet truly approached its real value.
The situation of land plots being sold at a loss has occurred in many places recently (Illustrative photo: Ha Phong).
Nguyen Van Duc, a real estate broker in Bac Ninh, shared that from mid-2022, land prices in urban areas of Bac Ninh stagnated and decreased, with some cases experiencing significant losses due to poor market liquidity. In the last few months of 2023, the land market saw some transactions again, but not many, mainly involving plots in prime locations being sold at a loss of 20-30% compared to the peak of the "land fever" in early 2022.
Similar to Mr. Duc's statement, many real estate brokers in Hanoi say that land prices in suburban districts such as Me Linh, Thach That, and Ba Vi have decreased since mid-2022. Notably, areas benefiting from infrastructure development, such as the Ring Road 4, are likely to remain sluggish. To sell quickly, investors may have to further reduce prices by 10-20%.
"In December 2023, the number of people listing land plots for sale at brokerage offices decreased by almost half compared to the previous November. However, current selling prices have fallen, and some individuals who borrowed money for speculation are reaching their limits, forcing them to increase their stop-loss orders by 20-50%," shared Nam, a broker in Me Linh district.
Land plots are being divided and left abandoned en masse in Thach That district, Hanoi (Photo: Ha Phong).
Closely monitoring the land market, Mr. Tran Quang Huy - a real estate investor in Hanoi - said that it is highly likely that the price of garden land used for homestays and accommodation areas that capitalized on the trend of leaving the city for the countryside, which was once booming, may have to fall by another 10-20%.
Land plots remain the "king" of investment.
It's clear that land prices have cooled down considerably compared to their peak. However, according to experts and experienced investors, land prices have only cooled down in comparison to their own past performance; compared to most other types of properties, it remains one of the most attractive segments for large investors seeking long-term investment havens.
According to Mr. Pham Duc Vinh, who has over 10 years of experience investing in land plots, investing in land plots is attractive due to its high return on investment and the much shorter price increase cycle compared to other types of investments; typically, land plot investors can realize profits after 2-3 years.
"Individual investors and 'sharks' are still scrambling to acquire land in areas with high potential for price appreciation. The difference between current land investors and those during the market boom is that they now have strong capital flows and are committed to long-term investment, rather than those who speculate or use financial leverage," Vinh shared.
Landowners in Thach That district, Hanoi, put up signs saying "Urgent Sale" (Photo: Ha Phong).
Mr. Dinh Minh Tuan, Director of a real estate information channel, believes that in the long term, land prices may continue to rise and transactions will resume. Real estate prices depend on other factors such as infrastructure development, economic growth, and people's income.
Meanwhile, land plots are a type of investment that any market participant can make due to their diversity in size, price, and location. In localities with rapid economic development, land plots in these areas will continue to experience sustainable growth.
Also assessing the potential for long-term investment in real estate, Mr. Nguyen The Diep - Vice Chairman of the Hanoi Real Estate Club - commented that "land plots are still king." Investors with available capital or using low financial leverage can consider investing.
This expert advises investors to carefully consider their options to avoid falling into a "price drop trap." In particular, at this time, investors should avoid buying land based solely on planning information, as this often results in high prices, low returns, and slow growth. If deciding to invest in planned areas, careful consideration is necessary, choosing locations with high development potential and quick liquidity.
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