The Law on Real Estate Business (amended) passed on November 28 stipulates that land use rights cannot be transferred to individuals who build houses or divide land into plots for sale in wards, districts, and cities of special-class, class I, II, and III urban areas. This law will officially take effect from January 1, 2025.
According to investors and experts, this regulation will strongly impact the real estate market.
Mr. Giang Anh Tuan - Director of Tuan Anh Trading Floor predicts that in the coming time, small houses will be in short supply, while large houses and land will be difficult to sell.
For a long time, townhouses with an area of about 30m2 and priced at 2-3 billion VND have always attracted customers because their finances are suitable for the majority of people, especially those with real housing needs.
" Houses with an area of 30-40 square meters have always been scarce. Now that there are regulations to tighten subdivision, houses of about 30 square meters will truly become rare and sought after by many people, including those who need to live there and investors ," said Mr. Tuan.
Small houses of 30 square meters are expected to become increasingly popular. (Photo: Ngoc Vy).
Meanwhile, large plots of land will be very difficult to sell because if they are not divided into lots, they will have to sell the whole large plot of land, the total price is high, while the number of customers with abundant finances is not much.
Recently, many investors have been hunting for plots of land with an area of several hundred square meters with the calculation of dividing them into smaller lots to sell to those with real needs. Many landowners have won big with the above trick of "dividing plots to sell land". However, if the regulation on tightening subdivision comes into effect, this way of doing business will not be possible.
Mr. Nguyen Huu Cau - a real estate broker in Hoang Mai district ( Hanoi ) said that if the subdivision is tightened, the risk of "unsold" land may occur because large plots of land come with large finances. Not all customers are willing to spend money on large plots of land due to large financial resources and slow liquidity. This type is only suitable for those who want to do business such as opening homestays, resorts, or farmstays. But this customer base is small.
Meanwhile, there are many customers who want to buy small plots of land, with finances ranging from a few hundred million to 2 billion. They want to hold on to the land, wait for positive information, prices to go up, and then sell their goods.
“ A 200 m2 plot of land costs about 8-10 billion VND. If it is divided into smaller plots of about 40 m2, investors can easily approach and sell to many people because their finances are only about 3 billion VND. That is the reason why large plots of land will easily be unsold. And investors holding large plots of land that have not yet had time to separate the land use right certificate will have difficulty selling or will be forced to sell at a low price ,” said Mr. Cau.
According to Mr. Cau, the profit from buying a large land fund and then dividing it into smaller plots for sale ranges from 30-50%. This is the reason why many investors “prefer” this form of land division.
“ The price of small plots of land will certainly be pushed up in the near future ,” Mr. Cau commented.
Analyzing this issue, Mr. Dinh Minh Tuan, Director of Batdongsan in the Southern region, predicted that the land segment will face difficulties when this law officially takes effect.
Mr. Tuan explained that currently 90% of land transactions on the market come from free subdivision products of individuals and small real estate companies developing self-divided land models.
According to Mr. Tuan, it is always easier for individuals to apply for land subdivision than for businesses to implement projects and apply for licenses. Because this type of land has diverse prices and small areas, it is easy to liquidate. For investors who buy large plots of land and divide them, it is very popular because the form of buying and selling is free, with few formal projects.
Mr. Tuan said that tightening the subdivision also means that this type of land will face difficulties due to scarce and narrowed supply. Buyers will also have difficulty accessing it due to scarce supply.
This person predicts that investors holding large plots of land may be forced to sell at “discounted prices”. The source of discounted goods will come from investors who hold land with the intention of dividing it into plots to make a profit. When liquidity is slow, landowners are forced to lower prices.
However, due to their high value, large-scale land products will be difficult to find customers and buyers may be able to “squeeze prices” from landowners. The reduced liquidity of land will also make the market more difficult in the context of the prolonged recession.
Chau Anh
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