Abnormalities, disadvantages and instability from the “Thu Thiem style” land auction in the suburbs of Hanoi – Part 2
There will be many consequences for the real estate market and the economy if recent land auctions in the suburbs of Hanoi are not clarified as being manipulated by speculators and land brokers.
Since the reopening of land auctions in the suburbs at the beginning of the year, it is not difficult to see the irregularities in land auctions with suspicions of manipulation by speculators and land brokers, creating the risk of disrupting the Government's efforts to reduce housing prices and ensure social security, while also causing the entire economy to stagnate due to the psychology of waiting for high-priced land sales.
Part 2: Dark motives and the recurring "nightmare" of Thu Thiem land
The common point of the recent land auctions that have caused a “fever” in the suburbs of Hanoi is the participation of many groups of individual speculators, not even local people, pushing land prices to unreasonable, non-market levels and predicting that there will be absolutely no real transactions. Many market members ask themselves “Are there dark motives” behind the recent land auction tricks? What is the role of the State management agency here when allowing the situation of land brokers to monopolize and manipulate the market?
When speculators fan the fever of auction land
According to many experts, the potential for price increases in the auction area in the short term is certainly not much, because it only serves the residential and investment needs of residents in that area. However, the question raised after the two recent "feverish" auctions in Tien Yen commune (Hoai Duc) and before that in Thanh Cao commune (Thanh Oai) is what percentage of local people won the auction.
In many online forum groups, Dau Tu Newspaper records show that many people claiming to be local residents said that they were lucky enough to win the recent auction because they had no need for it, so they wanted to sell it at a slightly higher price, a few hundred million dong higher. However, in reality, when recorded locally, most of them were not people with permanent residence in the area.
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| After the land auction in Tien Yen (Hoai Duc), there was information about the transfer with a price difference of "several hundred million dong". |
For example, at the recent auction in Thanh Cao commune, according to Mr. Nguyen Cong Quang, Director of the Land Fund Development Center of Thanh Oai district, only 2 people in Thanh Oai won the auction with a land lot price of nearly 80 million VND/m2. In Me Linh district (Hanoi), there were a few people who won many lots and in Chuong My district (Hanoi), there was one person who won the auction. Most of the auction winners came from Bac Ninh, Bac Giang, Hai Duong, and Phu Tho.
Meanwhile, confirmation from many people participating in the auction in Tien Yen commune (Hoai Duc) also said that up to 99% of the people in the final winning group were not residents of Tien Yen commune, but were groups of investors from other localities such as Ba Vi, Kim Chung (Hanoi), Hai Duong, Bac Ninh, Bac Giang... The investors who participated but were not "lucky" enough to win the auction were also very few local people, mainly investors in groups participating in the auction at the same time from 7 to 19 plots of land.
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| Associate Professor, Dr. Dinh Trong Thinh, former Head of International Finance Department, Academy of Finance |
In addition to the auction participants inside the Hoai Duc District Gymnasium, a large number of real estate brokers also gathered to follow the land auction from the morning of August 19. Some brokers turned on live video streaming on social media platforms to report on the atmosphere around the auction area.
With the concept that "if infrastructure is still limited, it will be better later, if farmland is later urbanized, if there are not many special economic advantages, people will have it, but if they don't buy land now, it won't be available for many years", these groups of investors do not hesitate to spend money to push auction land prices sky high, even beyond the imagination of local people.
The “Shadow” of the Thu Thiem land auction nightmare
According to a survey by Batdongsan.com.vn, the price of land for sale in Thanh Cao commune (Thanh Oai, Hanoi) has been on the rise in recent years, according to a report recently released by the technology platform Batdongsan.com.vn. According to the price history tool of this unit, the average land price for sale in this locality has increased by about 80% in the past 4 years - from the common level of 15 million VND/m2 in 2020 to 27 million VND/m2 in 2024. In the past 2 weeks, the price range of many new land lots for sale on this website has been pushed up to a new level of 43 million VND/m2, an increase of about 60% compared to the old price.
Meanwhile, also observing the broker's sales data on this website, in Tien Yen commune (Hoai Duc, Thanh Cao) there has also been a significant increase in the past few years, from around 10 million VND/m2 to around 40 million VND/m2 since the information that this district is preparing to become a district, and at the same time, the Ring Road 4 runs through. However, just a few weeks after the land auction in Thanh Cao, land prices in Tien Yen and some surrounding communes have quickly increased by 30-40%, trading around 55-60 million VND/m2.
The heat from land auctions has clearly had a huge impact on the psychology of investors and local residents, as many people believe that if the winning auction price is so high, there is no reason why their land price cannot be adjusted to a corresponding level.
In the role of a person who wants to buy land in Thanh Cao commune for business services, talking to many brokers, they said, "Currently, the demand for land in Thanh Cao is very high, there are almost no plots available. If you want a good plot, you have to wait or even deposit more money for the broker to convince the previous buyer to give it up, then you might have a chance."
Similarly, in the “Hoai Duc” fire pan, in the past few days, investors who want to buy land around the Long Khuc area to take advantage of the auction land have found it almost impossible and have to pay a huge difference of several hundred million to be able to buy back the old land lots that investors previously held. Not only are there bad land lots in alleys that are mainly for living but also difficult to do business, but they are also not as easy to find as imagined.
According to Mr. Nguyen Chi Thanh, Vice President of the Vietnam Association of Realtors (VARS), the biggest concern with land auctions with "unusually" high winning results like this is the price hike by groups of investors with unclear motives.
This is unusual because after the recent difficult market period, even with products with good infrastructure, clear planning, located in areas with growth potential, many investors are still very cautious, but land prices in Thanh Oai or Hoai Duc are sky-high.
Not to mention that the participants in the auction in Thanh Oai mainly came from other localities, Mr. Thanh said, this further proves that it did not come from real housing needs. Even many investors immediately after winning the auction rushed to sell with a difference of several hundred million, further demonstrating this.
At the current low deposit level calculated on the starting price (100 - 200 million VND/lot), investors accept to waive the deposit but the consequence is that the price level around the auctioned land area has been pushed to a new height, while the actual demand for buying is not high. While the State only collects a small amount of money from the deposit, it will lose more when the compensation cost for many projects around the area will certainly be pushed up.
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| The land auction fever in some suburban districts, with speculative price inflation, will negatively affect and slow down the socio-economic development of the locality. |
Meanwhile, sharing the same opinion, real estate investment consultant Tran Minh said that the worrying thing is that brokers and investors in Hanoi are using that information to compare and increase the selling price of projects in other areas, making Hanoi real estate prices even hotter. Meanwhile, the potential for price increases in the auction area in the short term is certainly not much because it only serves the needs of residents in that area to buy and invest. There is also no outstanding planning around here to increase prices or attract people from other places to come here.
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| Mr. Nguyen Quoc Hiep, Chairman of GP Invest |
These “record” auctions may have been driven by a combination of two factors.
The first is due to rumors, aiming to “inflate” prices to make a profit through auctions. The second is due to the influence of some ignorant people who do not have complete information, stemming from the fact that some localities have issued a draft of a new land price list that is very high, increasing from 5 to 50 times. Therefore, this group of people is likely to be worried about the upcoming increase in land prices and they participate in auctions to “get ahead”.
Therefore, after the results of this auction, wait until the deposit period ends to know whether the price is actually virtual or not. 
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What happened in Thanh Oai or Hoai Duc, although different in scale, also made many people recall the "unprecedented" land auction in Thu Thiem (HCMC) at the end of 2021. In that auction, all 4 plots of land, after the price was pushed up too far from the starting price, in which a subsidiary of a corporation won the auction for 24,500 billion VND for a land area of more than 10,000 m2, or more than 2.4 billion VND/m2. Fortunately, the above price was not established, because not long after that, the winning enterprises simultaneously asked to cancel their deposits.
But right after the land auction in Thu Thiem, there were acts of taking advantage of the virtual winning price to "follow the flow" and inflate land and housing prices in the neighboring area. Even other listed companies with land funds nearby also benefited when the value of bonds and stocks increased by several times.
According to Dr. Tran Xuan Luong, Deputy Director of the Vietnam Real Estate Market Research and Evaluation Institute (VARS IEX), the land auction fever in some suburban districts is speculating and inflating prices, and this will negatively affect and slow down the socio-economic development of the locality. If urbanization slows down, the attraction of both foreign and domestic investment will also decrease. The long-term consequences for the local economy are huge.
“When land auctions increase and a new price level is established, the State’s compensation when reclaiming land for people in the future will encounter many obstacles, making the process of site clearance and project implementation difficult. The State needs to have clear policies and viewpoints on this case,” said Dr. Tran Xuan Luong.
(To be continued)
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