Suburban land prices have dropped 40-50% compared to the peak, should you buy?

Suburban land market warms up

According to Dan Tri reporters, the land market is gradually improving after the ban on land division and sale has been gradually "untied". In many suburban areas of Hanoi or suburban provinces such as Bac Ninh, Bac Giang, Ninh Binh... transactions have begun to appear again, although still quite small.

For example, in the area of Binh Yen and Tan Xa communes in Thach That district (Hanoi), the price of subdivided land on 4-5m wide roads is currently being advertised for sale at 16-20 million VND/m2, down about 30% compared to the "land fever" period. In particular, the price of subdivided land in alleys is only 11-12 million VND/m2, down 40-50% compared to the fever period.

Notably, real estate brokers, after a period of "evaporation" from the market, have now returned and are promoting land sales. On many real estate trading sites, information about land for sale ranges from 600 million VND to over 1 billion VND.

Đất nền ven đô giảm giá 40-50% so với đỉnh, đã nên mua? - 1 — Land near Hoa Lac High-Tech Park (Thach That, Hanoi) for sale at a loss (Photo: Ha Phong).

According to Mr. Nguyen Duc Thang - a real estate investor - most of the land investors who have had to "cut their losses" recently are "amateurs" or inexperienced investors who have "broken" their financial leverage. Meanwhile, many "big players" are still taking advantage of the situation to buy land in potential areas.

"Suburban land is still an attractive product for Hanoi investors because of its liquidity and value. Many investors with available finances are "collecting" large plots of land to carry out subdivision in the near future," said Mr. Thang.

After more than a year of having to temporarily change jobs, Ms. Nguyen Thi Hanh (Dong Anh, Hanoi) recently decided to focus on real estate brokerage again. According to Ms. Hanh, in the past 2 months, land transactions in the suburban areas have slightly improved. However, most investors still have a "testing the waters" mentality.

According to Ms. Hanh, in the low-cost land segment, the number of investors and real buyers is almost equal. Investors in these segments do not have very strong economic potential, invest on a small scale or for immediate use but often have available finances.

According to the real estate market report of the third quarter of the Vietnam Association of Realtors (VARS), the segment of land with red books and commercial housing under 2 billion VND has a clear increase in transaction volume. Especially in areas with infrastructure investment or areas adjacent to industrial parks, the selling price increased by 5-7% compared to the previous quarter.

This is also the only bright spot segment of the land type, because with land priced from 3 billion VND/plot or more, the transaction situation is still quite gloomy.

The potential for suburban land price increase is good, but what should investors pay attention to?

The potential of suburban land is still present, but according to experts, investors need to be cautious because the current market still has potential risks, especially in terms of liquidity. Not to mention, the subdivided land market, to some extent, is still under the control of the "big guys".

Mr. Tran Khanh Quang - real estate expert - commented that this year's market has opportunities but is quite dim, the opportunity may only really ripen in 2024. Land will still be a segment with high profit potential but is currently not for the majority and needs to be carefully selected.

Đất nền ven đô giảm giá 40-50% so với đỉnh, đã nên mua? - 2 — Liquidity of suburban subdivided land is still poor (Photo: Ha Phong).

Mr. Quang said that land will be an opportunity for two groups: professional investors and real home buyers with cash. Amateur investors should not "jump in" or if they want to, they need long-term cash flow, with a vision of 3-5 years.

"Based on the actual situation, investors can offer a 30% discount, then 25% and then down to 20%. Buyers should boldly negotiate, and can close the deal with a 15-20% discount, which is a feasible discount. The last months of this year and early 2024 may be the most appropriate time to put down money," the expert noted.

Meanwhile, some professional investors assess that urban land, land on the outskirts of big cities is almost saturated, the rate of return will be lower. Meanwhile, land prices in many provinces are still quite low, so the increase margin will be larger.

However, high profits also come with high risks. Therefore, to be safe, when investing in provincial land, investors need to determine the waiting period which can be up to 3-5 years or longer. This is only suitable for idle cash flow, financial leverage should not be used.

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