"Sharks" are rushing to buy real estate to catch the opportunity of price increase

The annual land price list can cause land prices to increase dozens of times. Grasping the above information, many businesses and individuals with financial potential can take advantage of buying real estate before the new law is implemented.

At the workshop “Finding investment opportunities in the second half of the year” organized by Dau Tu Newspaper, Dr. Le Xuan Nghia, member of the National Monetary and Financial Policy Advisory Council, revealed that there are projects that have been “frozen” for more than 6 years due to land clearance issues. The reasons all revolve around the issue of rights of people whose land has been reclaimed.

“On Kim Ma Street, Ba Dinh District (Hanoi), street-front houses are being sold for up to 500 million VND/m2. That is the market price, while the compensation price is only around 120 million VND/m2, much lower than the expected price of the homeowner,” Mr. Nghia shared a real story.

Most recently, according to the draft adjustment of Decision No. 02/2020/QD-UBND on land price list in Ho Chi Minh City. Land prices calculated by the new method have increased 10 - 40 times compared to before.

For example, on Dang Cong Binh Street, Hoc Mon District, the land price in the current price range is only about 600,000 VND/m2. However, if calculated according to the new land price list, the number can increase 40 times, up to more than 24 million VND/m2.

“Many businesses and people are waiting for a new land price mechanism to be compensated for site clearance according to market principles. This is the reason why many provinces that were very successful in disbursing public investment capital such as Hung Yen, Bac Ninh, and Hai Phong have had unsatisfactory results this year,” said Mr. Nghia.

Mr. Tran Tuan Tai, Investment Director of SonKim Retail, foresaw the potential from real estate M&A deals. Photo: Chi Cuong

According to Mr. Tran Tuan Tai, Investment Director of SonKim Retail, many investors have anticipated price fluctuations in the real estate market. Many “sharks” have been actively looking for opportunities in distressed assets (a type of asset that is sold at a price much lower than its real value because people or businesses need money urgently).

Since the beginning of the year, many real estate companies have seen opportunities to open M&A deals (mergers and acquisitions) to increase land funds. For the retail sector, the recent wave of land returns has been seen as an opportunity for the “big guys” to take advantage of and collect.

“Retail real estate must have enough potential to serve the chains. If the company wants to optimize the exploitation value, it will have to own 350 stores or more. Only then will the business have the advantage to negotiate with suppliers, receive discount incentives, optimize logistics costs…”, SonKim Retail’s Investment Director analyzed.

From a broader perspective, the acquisition of real estate by large enterprises also helps create liquidity for the market. If projects are used for business, generating cash flow and creating jobs, it will be an extremely positive thing for society.

“Meanwhile, for individual investors, they tend to be interested in products in the real estate segment and have mid-range prices. This is also the type of investment that many market research units recommend at the present time,” Mr. Tuan Tai added.

Source: https://baodautu.vn/batdongsan/ca-map-rao-riet-mua-gom-bat-dong-san-don-co-hoi-tang-gia-d220896.html