Decision to pilot expanding land for commercial housing nationwide; Expectations of recovery in real estate developers' ability to pay; Hanoi to have a state-of-the-art opera house, spanning over 25,000 square meters.
Land auction in Soc Son receives bids of 30 billion VND/m2; Ministry of Finance proposes taxing the buying and selling of houses and land based on the length of ownership.
Decision to pilot expanding land for commercial housing nationwide; Expectations of recovery in real estate developers' ability to pay; Hanoi to have a state-of-the-art opera house, spanning over 25,000 square meters.
Here are the real estate news highlights of the week.
Decision to pilot land expansion for commercial housing nationwide
On the afternoon of November 30th, the National Assembly passed a Resolution on piloting the implementation of commercial housing projects through agreements on land use rights or existing land use rights, with 415 out of 460 attending delegates voting in favor, 19 voting against, and 26 abstaining.
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| The National Assembly voted to pass the resolution. |
The Resolution stipulates the pilot implementation of commercial housing projects through agreements on receiving land use rights or having land use rights (pilot projects) nationwide in the following cases: projects of real estate business organizations receiving land use rights; projects of real estate business organizations having land use rights; projects of real estate business organizations having land use rights and receiving land use rights.
Another case involves real estate development projects established by organizations currently using the land to implement commercial housing projects on the land occupied by production or business facilities that must be relocated due to environmental pollution, or facilities that must be relocated according to construction or urban planning.
Pilot projects, according to the resolution, must meet the following conditions: the scope of the land area and land plot for project implementation must be consistent with the district-level land use planning or construction planning, urban planning.
The scope of the land plot for the project must conform to the approved local housing development program and plan.
The scope of the land and plots of land for project implementation is included in the list of land plots planned to implement the pilot project approved by the Provincial People's Council according to the provisions of this Resolution.
A written approval from the provincial People's Committee regarding the agreement on land use rights for the implementation of the pilot project is required in the cases stipulated in this Resolution, and is also a condition stated in the Resolution.
Real estate business organizations must satisfy the conditions prescribed by law on land, housing, real estate business, investment and other relevant legal provisions.
The selection of pilot projects must meet the following criteria: being implemented in urban areas or areas planned for urban development; the total residential land area in pilot projects (including existing residential land and land planned to change land use purpose to residential land) does not exceed 30% of the additional residential land area during the planning period (compared to the current status of residential land use) according to the approved land allocation and zoning plan in the provincial planning for the period 2021 - 2030; not belonging to the projects specified in Clause 4, Article 67 of the Land Law;
For the case specified in Point a, Clause 1, Article 1 of the Resolution, the land area for implementing the pilot project must not be on the list of works and projects requiring land recovery approved by the Provincial People's Council according to the provisions of Clause 5, Article 72 of the Land Law.
For areas of national defense and security land that have been planned to be removed from national defense and security land and meet the conditions stipulated in Clause 2, Article 3 of this Resolution, but have not yet been handed over to local authorities for management, priority shall be given to the Ministry of National Defense and the Ministry of Public Security to organize pilot projects to prioritize the sale, lease, or lease-purchase of these lands to officers and soldiers of the armed forces in accordance with the law.
The resolution takes effect on April 1, 2025, and will be implemented for five years.
The Ministry of Finance proposes taxing the buying and selling of houses and land based on the period of ownership.
Recently, the Ministry of Finance submitted a proposal to the Government requesting the development of a draft Law on Personal Income Tax (replacement). In this proposal, the Ministry suggested amending and supplementing regulations regarding taxable income of individuals from real estate transfers to ensure consistency with the 2024 Land Law.
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| The Ministry of Finance's tax proposal directly targets real estate speculators. Photo: Thanh Vu |
Specifically, in the submission, the Ministry of Finance stated that the current personal income tax policy does not differentiate based on the length of time the transferor has held the real estate.
Meanwhile, some countries around the world have used tax tools to increase the cost of speculation and reduce the attractiveness of real estate speculation in the economy, including personal income tax.
Notably, some countries also apply taxes on profits earned from real estate transactions based on the frequency of transactions and the time it takes to buy and sell the property. The faster this process occurs, the higher the tax rate; the slower it occurs, the lower the tax rate.
The Ministry of Finance cited Singapore as an example, where land bought and sold is taxed at 100% of the difference in value in the first year. After two years, the tax rate is 50%. By the third year, the figure will be 25%.
In Taiwan, real estate transactions made within the first 2 years after purchase, the tax rate is 45%. Made within 2-5 years, the tax rate will be 35%. Within 5-10 years it is 20% and after 10 years it is 15%.
According to the Ministry of Finance, in order to achieve a reasonable level of regulation and avoid speculation and real estate bubbles, the State could consider implementing a tax on personal income from real estate transfers based on the holding period, as is the practice in some countries.
Regarding the specific tax rate, the Ministry of Finance believes that it needs to be studied and determined appropriately, reflecting the actual state of the real estate market. In addition, the application of personal income tax policy on real estate transfers based on holding time needs to be synchronized with the process of perfecting policies related to land and housing.
In addition, the synchronization and readiness of the information technology infrastructure for land and real estate registration is also a crucial factor determining the success of the policy.
Expectations are rising for real estate developers' ability to repay loans.
The residential real estate industry report based on the top 30 residential real estate companies in terms of revenue, widely announced by VIS Rating on the afternoon of November 28, stated that real estate sales in Hanoi and Ho Chi Minh City in the third quarter of 2024 increased by 48% compared to the previous quarter, the highest level in the past 4 quarters. Housing demand remains strong, reflected in high absorption rates and strong growth in home loans at 7%, compared to the same period last year by only 1%.
Expectations of rising home prices, combined with lower down payments, will continue to drive strong demand from homebuyers. Many developers such as Vinhomes, Nam Long, Nha Khang Dien, An Gia and Nha Ba Ria – Vung Tau have recorded increased sales, mainly in the high-end segment.
However, the revenue and profit for the first nine months of 2024 of the developers on the report's watchlist decreased by 20% and 43% respectively compared to the same period last year, due to the decrease in handover volume from weak sales in 2023. Therefore, it is expected that more than 60% of developers will not complete the profit plan for the whole year of 2024.
In 2025, VIS Rating expects developers to significantly increase the number of new projects, helping to improve their sales and cash flow. The industry's debt repayment capacity remained weak in Q3 2024, but leverage levels are expected to be controlled thanks to new regulations, and developers' cash flow will improve due to increased sales.
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| It is expected that the debt repayment capacity of real estate investors will start to improve from the weak level of 2023 - 2024. Photo: VIS Rating |
As of Q3/2024, more than half of the developers monitored by VIS Rating had weak leverage and debt service profiles. This was mainly due to excessive leverage for project development in the 2021-2023 period and unfinished project inventory and unsold inventory as market sentiment deteriorated from 2023.
However, as sales progress improves, VIS Rating expects the debt repayment capacity of real estate developers to begin improving from the weak levels of 2023-2024.
With a positive outlook for new project sales and cash flow, developers’ debt coverage ratios are expected to gradually improve. New regulations issued in July 2024 will limit the use of debt for new projects. Therefore, VIS Rating expects debt growth to continue to slow from a high of 15%/year in the period 2022-2023.
Hanoi will have a state-of-the-art opera house, spanning over 25,000 square meters.
Recently, the Vice Chairman of the Hanoi People's Committee, Duong Duc Tuan, signed Decision No. 6132/QD-UBND approving the detailed planning project for the central spatial axis area of the Quang An peninsula, at a scale of 1/500.
Accordingly, the total planned land area is about 44.1 hectares. The project will include a specialized cultural and artistic park, religious and belief facilities, entertainment areas, and hotel and commercial services.
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| Perspective of the new Opera House. |
Notably, Quang An peninsula is also the designated site for the construction of the city's new Opera House. This will be a large-scale, modern art work, representing the image of the Capital. The theater area will be built on an area of over 25,000 m2 with a total floor area of 42,000 m2.
Previously, in a conference to gather public opinions in July 2022, the then Vice Chairman of Tay Ho District, Mr. Nguyen Le Hoang, affirmed that the theater would not greatly affect the water surface space and would not be located within the water surface area of West Lake.
In addition, another piece of information that the public is interested in is the identity of the designer of this important project. The person who was “chosen and entrusted with the gold” is Mr. Renzo Piano, a famous Italian architect. He is the “author” of Kansai International Airport (Japan) – the first airport built at sea; the Parco della Musica Auditorium (Italy) – one of the largest performing arts projects in Europe…
In the design of the Opera House in Quang An Peninsula, Mr. Renzo Piano came up with the idea of a roof structure that was only about 200 - 600mm thick. The super thin structure was conceived by the architect 40 years ago - a time when construction techniques could not meet this special requirement.
Not only does the new Hanoi Opera House have one of the most unique roof shells in the world, it also uses many advanced technologies and design techniques. The entire wall of the main auditorium is equipped with a system of acoustic panels that can be operated mechanically.
For each different type of performance, the acoustic panels will be controlled to close, open, up and down in corresponding directions and positions. From there, ensuring sound reflection, sound absorption and reverberation time suitable to the requirements of each art program.
Soc Son land auction: Paying up to 30 billion VND/m2, then "too scared, asked to withdraw"?
According to sources from Baodautu.vn , during the auction of 58 land plots in Quang Tien commune, Soc Son district (Hanoi), many bidders, realizing they no longer had a chance of winning the bids for the desirable plots, offered unreasonably high prices.
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| Customer's bid in round 6. Because the price was pushed up too high, the participant withdrew. |
Specifically, by the fifth round of bidding, some bidders had submitted bids for land exceeding 30 billion VND/m2. Many other plots of land also received very high bids, ranging from 60 to 101 million VND/m2. However, by the sixth and final round, they withdrew their bids.
Ultimately, only 22 out of 58 plots of land were successfully auctioned, with prices ranging from 32 to 50 million VND/m2. All those who bid the highest prices in round 5 withdrew their bids in round 6.
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| The price is paid in round 5. |
Sharing with reporters, the source - who is also a direct participant in the auction - said that the land lots here only cost an average of 35 - 40 million VND/m2. The groups and associations that participated in this auction do not really understand the market, so they lost their opportunity. The impulsive bidding action not only did not solve the problem, but also damaged the image of land auctions, causing negative impacts on the market.
“I hope the authorities will thoroughly review this auction. This is a deliberate, organized act that disregards the law,” said the indignant person.
58 plots of land were put up for auction with a starting price of 2.8 million VND/m2. The plots range in size from 90 to 220 m2. The deposit amount for each plot ranges from 44 to 111 million VND. The auction will be conducted through six mandatory rounds of direct voting.
Previously, in March 2024, a land auction in Hoai Duc was canceled due to signs of violations. Accordingly, in the first round of the auction, 15/33 plots of land were bid up to 100 - 180 million VND/m2, from a starting price of only 57 - 62 million VND/m2.
Then in round 2, the customer who paid the highest price did not bid and was deliberately disqualified, creating conditions for the person who paid the lowest price in round 1 to win the auction. Considering that the customer had signs of violating the regulations on property auctions, the organizing committee sealed all auction registration documents and bid forms to transfer to the police agency for investigation and handling according to the provisions of law.
Binh Dinh province is holding an auction to find an investor for a residential project worth over 1.7 trillion VND.
The Asset Auction Service Center (under the Department of Justice of Binh Dinh province) has just announced the auction of land use rights for the residential, service, and education project west of Tay Son road.
Accordingly, the auctioned land belongs to the Binh Dinh Transport Training Center and adjacent areas located in Quang Trung Ward, Quy Nhon City. The land area is more than 6.3 hectares, of which the land area for building adjacent houses is more than 2.5 hectares; the land for commercial and service works is more than 0.4 hectares...
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| Planning of Residential, Service and Educational Area Project West of Tay Son Street. |
The project includes 238 terraced houses (investors must build the shell and complete the exterior, with a maximum height of 4 floors); and the construction of commercial and service buildings for tourism and office business (maximum height of 5 floors).
In addition, the investor must be responsible for investing in completing the technical infrastructure of the educational land with an area of 0.4 hectares; paying money equivalent to the value of the land fund invested in building the technical infrastructure system to build social housing (the land fund is set aside for 20%, about 0.5 hectares for developing social housing).
According to the Asset Auction Service Center, the starting price of the asset is over 558 billion VND, with a bidding increment of 5% (over 27.9 billion VND). The auction will be held at 8:30 AM on December 21, 2024, at the Auditorium of the Asset Auction Service Center, 37 Phan Dinh Phung Street, Quy Nhon City, Binh Dinh Province.
The project implementation cost is VND 1.144 billion (excluding the land use fee from the winning bid). The project is scheduled to be completed within 48 months from the date of the decision recognizing the winning bid or the approval of the investor.
Thua Thien Hue auctions "golden" land of more than 1,600 m2 to carry out commercial project
The People's Committee of Thua Thien Hue province said that on December 7, the Land Fund Development Center - Department of Natural Resources and Environment in coordination with Quang Nam Finance and Price Joint Stock Auction Company Limited will conduct an auction to sell assets on land, transfer land use rights in the form of land lease to implement the investment project of the Commercial Service Area at the land plot No. 47 Hai Ba Trung, Hue City.
Accordingly, the land plot at 47 Hai Ba Trung has an area of 1,646.6 m2; with assets on the land attached to the auctioned land including a 3-storey office building, a 2-storey office building, a guard house with a construction area of 685 m2, floor area of 1,628 m2. With a land use term of 50 years, from the date of the Land Lease Decision of the People's Committee of Thua Thien Hue province, the payment will be collected at once for the entire lease term.
The expected starting price for the auction of the land plot is 100.42 billion VND. Of which, the starting price for land use rights is 93.47 billion VND, the starting price for assets attached to the land is 6.94 billion VND. With the deposit of more than 20 billion VND, each price step for land use rights is 1.8 billion VND, for assets attached to the land is 140 million VND.
According to the People's Committee of Thua Thien Hue province, after the auction, the land will be invested in a 9-storey commercial and service area project. The products and services provided by this project are to provide essential commercial, service, tourism, entertainment and recreation services.
The project has a total investment of more than 233,047 billion VND. Of which, the investor's capital contribution must ensure at least 20% of the total project investment capital. The project implementation progress shall not exceed 36 months from the date of land allocation or land lease, in which the construction commencement shall not exceed 12 months from the date of land allocation or land lease.
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