Suburban land is not for amateur investors, bright spots in the market, brokers are bustling back

The market is warming up, showing signs of improvement, things to note when investing in land, Binh Dinh calling for investment in many projects, regulations on land compensation when the State reclaims residential land... are the latest real estate news.

The real estate market from the beginning of 2023 until now has recorded a gradual increase in transaction volume. (Source: DT)

Signs of improvement

The report "Assessing the recovery process of the Vietnamese real estate market in the third quarter of 2023 and forecasting the market situation in the fourth quarter of 2023" by the Vietnam Real Estate Association (Vnrea) has just been completed, clearly stating that liquidity in the real estate market in the third quarter of 2023 has improved compared to the difficult period at the end of 2022 and in the first months of the year, the market began to record many "bright spots" in localities such as: Hanoi, Hai Phong, Lao Cai, Da Nang, Ho Chi Minh City... places where investment in infrastructure and transportation is promoted, with many sources of supply suitable to demand.

According to a recent survey by the Vietnam Association of Realtors (VARS), up to 60% of investors who have participated in the real estate market will continue to invest if bank interest rates continue to decrease. The real estate market has recorded a gradual increase in transaction volume since the beginning of the year. If in the second quarter of 2023, the market recorded 3,700 transactions, an increase of 37% compared to the 2,700 transactions in the first quarter, the third quarter recorded nearly 6,000 transactions, 1.5 times higher than the second quarter and more than twice as high as the first quarter.

According to representatives of real estate businesses, the apartment and housing market in major cities is currently showing signs of good absorption, focusing on the price segment under 10 billion VND in the central core area.

To continue to maintain the current market growth cycle, there needs to be mechanisms and policies to improve the stagnant supply. Real estate policies need to target all classes in society.

Dr. Nguyen Van Dinh, Vice President of Vnrea, commented that real housing demand is increasing and will certainly increase along with economic growth and urbanization... It is expected that at the Real Estate Forum at the end of 2023, Vnrea will announce real estate indexes, which will be the basis for project developers to refer to, so that when the project is formed, it can meet 60 - 70% of real demand, ensuring the requirements to attract domestic and foreign investors.

Real estate experts also commented that the draft Law on Housing, Law on Land, Law on Real Estate Business passed at the 6th Session of the 15th National Assembly, which led to the removal of legal "bottlenecks", capital sources, and investors' confidence returning to the main market... will be decisive conditions for the market to truly return to normal.

The real estate market in the fourth quarter of 2023 will be a stepping stone for market recovery from 2024, especially in areas with much room for development, synchronous and modern planning, infrastructure that is focused on investment, and low price levels...

Suburban land market warms up

Recently, the land market has gradually improved after the ban on land division and sale has been gradually "untied". In many suburban areas of Hanoi or neighboring 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.

According to the real estate market report of the third quarter of VARS, the segment of land with red books and commercial housing under 2 billion VND has seen a significant 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 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".

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

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.

Binh Dinh calls for investment in many fields, with a project worth 14 billion USD

The electronic information portal of the People's Committee of Binh Dinh province has just posted a list of 151 projects calling for investment in the locality in many different fields. The real estate, services, trade and tourism sectors have up to 80 projects, accounting for the majority of the investment calling list.

The project with the largest investment capital is the Urban Area investment in Subdivision No. 1, Nhon Hoi Eco-tourism Urban Area with a total capital of about 14 billion USD, an area of over 57 hectares. Next is the Urban Area investment project in Subdivision No. 3, Nhon Hoi Eco-tourism Urban Area, with an investment capital of 10 billion USD, an area of 36 hectares. Another project is the High-rise Hotel Area at Point No. 1, Nhon Ly - Cat Tien Sea Tourism Area, with an area of nearly 34 hectares, an investment capital of 2 billion USD.

Some projects have large areas such as the Tay Phu Commune Eco-Tourism and Farm Area (300ha); the Hoai Nhon Town Coastal Residential, Service and Commercial Area (300ha); the La Vuong Eco-Tourism Project (250-300ha); the Bai Con High-Class Eco-Tourism and Resort Area (100ha); the Van Phong Dam Tourism Area (70ha) with investment capital depending on scale.

The Binh Dinh Provincial People's Committee also focuses on the infrastructure sector with 30 industrial park and industrial cluster projects. Of which, the only industrial park project is Bong Son Industrial Park, with an area of 250 hectares in Dien Khanh Quarter, Van Cang, Lai Duc, Lai Khanh Nam. The remaining 29 industrial cluster projects are in different localities, with an area of less than 100 hectares.

In addition, Binh Dinh province also called for investment in 9 agricultural and aquatic projects; 2 healthcare projects; 8 supporting industry projects; 12 projects in the field of wastewater and domestic water collection and treatment; 3 cemetery construction projects; 3 energy projects; 4 market projects.

According to the latest data from the Department of Planning and Investment of Binh Dinh province, in the first 9 months of this year, the province attracted 6 newly registered FDI projects with a total investment capital of 46.2 million USD. Regarding domestic investment, the province attracted 62 new projects with a total registered capital of nearly 13,387 billion VND.

In the first 9 months, the province attracted 68 new projects with a total registered capital of VND17,960 billion, exceeding the annual plan by 13%. Of these, 17 projects were in economic zones and industrial parks with a total registered capital of over VND2,431 billion; 51 projects were outside economic zones and industrial parks with a total investment capital of over VND15,529 billion.

Regulations on land compensation when the State reclaims residential land

Article 79 of the 2013 Land Law clearly stipulates land compensation when the State reclaims residential land.

Bất động sản mới nhất: Đất nền TP. Hồ Chí Minh. (Nguồn: CafeF)

When the State reclaims land attached to housing, households and individuals must move their residence without being eligible for compensation for residential land. If they have no other place to live, the State will sell, lease, lease-purchase their housing or allocate residential land with land use fees collected. (Source: CafeF)

Specifically, households and individuals using residential land, Vietnamese people residing abroad who own houses attached to land use rights in Vietnam and are eligible for compensation as prescribed in Article 75 of this Law when the State reclaims land shall be compensated as follows:

In case there is no other residential land or house in the commune, ward or town where the land is recovered, compensation will be made in the form of residential land or house; in case there is no need for compensation in the form of residential land or house, the State will compensate in cash.

In case there is still residential land or housing in the commune, ward or town where the land is recovered, compensation will be made in cash. For localities with conditions for residential land fund, compensation in the form of residential land will be considered.

When the State recovers land attached to housing, households and individuals must move their residence without meeting the conditions for compensation for residential land. If they have no other place to live, the State will sell, lease, lease-purchase housing or allocate residential land with land use fees.

Economic organizations, overseas Vietnamese, and foreign-invested enterprises that are using land to implement housing construction projects when the State reclaims land, if they meet the compensation conditions prescribed in Article 75 of this Law, will be compensated for land.

The Government shall detail this Article. Accordingly, in cases where there is no other residential land or housing in the commune, ward or town where the land is recovered, compensation shall be made in the form of residential land or housing; in cases where there is no need for compensation in the form of residential land or housing, the State shall compensate in cash.

Pursuant to Article 66 of the 2013 Land Law, the authority to reclaim land is stipulated as follows:

The provincial People's Committee decides to reclaim land in the following cases: Reclaim land from organizations, religious establishments, Vietnamese people residing abroad, foreign organizations with diplomatic functions, and foreign-invested enterprises, except for the cases specified in Point b, Clause 2 of this Article. Reclaim agricultural land belonging to the public land fund of communes, wards, and towns.

The People's Committee at the district level decides to reclaim land in the following cases: Reclaim land from households, individuals, and residential communities. Reclaim residential land from overseas Vietnamese who are allowed to own houses in Vietnam.

In case the land recovery area includes both subjects specified in Clause 1 and Clause 2 of this Article, the Provincial People's Committee shall decide to recover the land or authorize the District People's Committee to decide to recover the land.

Source