Warning real estate investors not to follow 'rumors' of province and city mergers

DNVN - Land fever based solely on information without real investment in infrastructure development is often short-term. Therefore, investors need to be especially careful and should not follow "rumors" without careful research.

Recently, the proposal to merge provinces and cities has attracted strong attention from real estate investors. Many groups of investors have started “land hunting” in areas expected to become merger centers, hoping to benefit from this change.

However, experts from the Vietnam Real Estate Association (VARS) warn that this move poses many risks for investors.

According to updated information from members of the VARS Market Research Working Group in localities, just a few weeks after the information about the proposed merger of provinces and cities, land prices in some areas have increased sharply, up to 20% in some places. However, the transaction volume has mainly increased in areas predicted to be the merger center, with real estate prices not too high.

Many investor groups have started "land hunting" in areas expected to become merger centers.

The history of the Vietnamese real estate market shows that whenever there is information about new planning, land prices in related areas often increase sharply in the short term. The main reason is the FOMO (fear of missing out) mentality of investors. They rush to "put money down" with the belief that this change will lead to economic and social development, thereby increasing real estate values.

Although the decision to merge provinces and cities may have a positive impact on the real estate market, many investors cannot avoid the risk of relying solely on “rumor” information to decide to buy land. Although it is predicted that the adjustment of land price tables may indirectly promote land price increases, in reality, most of these price increases are speculative in nature and lack a solid foundation.

Even if there is an administrative change related to the merger, this does not mean that the area will develop strongly immediately. Especially in the context of real estate prices that have increased compared to the income of the majority of people in recent times, making it easy for many investors to make mistakes when deciding to buy land.

A typical example is when information about the district upgrade of some suburban districts in Hanoi or Ho Chi Minh City was released, land prices skyrocketed. However, after the fever passed, areas without proper investment in infrastructure quickly fell into a "deflated bubble" state, land prices dropped sharply.

VARS believes that the merger of provinces and cities can bring some benefits to the real estate market, especially helping to reduce legal procedures and create more supply for the affordable housing market. However, for real estate value to grow sustainably, there needs to be synchronous development in transport, economic and social infrastructure.

Infrastructure projects such as major roads, metro, schools and modern urban areas will be important factors to help the market develop stably.

Land fever based on information alone without real investment in infrastructure development is often short-term. Therefore, investors need to be especially careful and should not just follow “rumors” without careful research.

Experts warn that land fevers often only benefit a small group of speculators, while the majority of individual investors and real buyers may be stuck with overpriced land. After each land fever, many investors have had to bury their capital or accept to sell at a loss due to poor liquidity. Even experienced investors have failed many times when they did not sell their stocks in time.

VARS experts recommend that to avoid falling into “virtual” fevers, investors need to stay alert and avoid being swept away by the crowd. It is extremely important to carefully study the land price level in the area where they plan to invest, grasp planning information and evaluate the progress of infrastructure projects.

Buying when prices have increased sharply will come with great risks and only areas with clear planning and synchronous infrastructure are safe choices for long-term investors.

Faced with the complex developments of the real estate market related to the proposal to merge provinces and cities, investors need to be extremely cautious. Investing in areas with clear development potential and synchronous infrastructure investment will be a safer and more sustainable choice. Stay away from virtual land fever to protect capital and ensure long-term profits.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/canh-bao-nha-dau-tu-bat-dong-san-khong-chay-theo-tin-don-sap-nhap-tinh-thanh/20250320113845394