Land price adjustment has not affected Ba Ria - Vung Tau enterprises in the short term.
Although land prices in Ba Ria - Vung Tau province have just been adjusted to increase, leading local real estate businesses still show positive signals, as it has not affected compensation costs in the short term.
Ba Ria - Vung Tau province is one of the leading localities to announce the new land price list according to the 2024 Land Law. Specifically, on September 17, less than 2 months after the 2024 Land Law took effect, the Provincial People's Committee issued Decision No. 26/2024/QD-UBND on adjusting and supplementing a number of articles in the previous decision on the land price list.
According to Decision No. 26, the subject of land price adjustment is not used for compensation for site clearance, but is mainly applied for reference support, while compensation and site clearance still conduct specific price surveys for each area.
In fact, the land price adjustment has not affected investors at the present time. Sharing about the issue of announcing the new land price list with reporters of Dau Tu Newspaper, Mr. Nguyen Quang Tin, General Director of Construction Development Investment Joint Stock Corporation (DIC Corp) said: "The land price list is adjusted to gradually catch up with market prices. Meanwhile, the compensation of enterprises is following market prices, so in the short term it will not affect enterprises, but it will directly affect tax revenue and public investment projects."
Similarly, Mr. Le Viet Lien, General Director of Ba Ria - Vung Tau Housing Development Joint Stock Company (Hodeco) also said that the adjustment of land prices to increase by 20-30% due to the removal of the coefficient, so basically, there has not been any significant change. Currently, enterprises have applied compensation and site clearance prices as market prices, so in the short term, it has not affected the compensation costs and total investment capital of enterprises in each project.
DIC Corp and Hodeco are two large real estate enterprises in Ba Ria - Vung Tau province. DIC Corp is in the process of compensating for projects: North Vung Tau New Urban Area (13.02/90.5 ha has been compensated; Chi Linh Central Area (72.4/99.73 ha has been compensated)...
In recent years, DIC Corp has planned to increase disbursement, but the actual disbursement rate is often lower than planned. For example, in 2021, it planned to disburse VND 9,436.3 billion, but the actual disbursement was VND 3,026.44 billion, reaching a rate of 32.1%; in 2022, it planned to disburse VND 11,739.8 billion, but the actual disbursement was VND 3,473.5 billion, reaching a rate of 29.6%; in 2023, it planned to disburse VND 4,138 billion, but the actual disbursement was only VND 1,124.3 billion, reaching a rate of 27.2%.
The reason DIC Corp gave for the disbursement not meeting the plan for many years was due to difficulties in compensation and site clearance at key projects, leading to a disbursement rate lower than planned.
For Hodeco, in addition to implementing real estate projects in Ba Ria - Vung Tau province, the Company is expanding its investment to other provinces and cities, contributing capital to Thua Thien Hue Construction Joint Stock Company.
Hodeco's Board of Directors shared that in preparation for the projects, the Company has had a long-term land fund allocation process, so it is always proactive in project implementation and is not affected much in the short term.
However, the adjustment of land prices will certainly increase the cost of capital for future project preparation, making production and business activities more difficult, requiring businesses to be more cautious, in order to ensure a reasonable structure of short, medium and long-term projects, ensuring stable and long-term development.
“Basically, increasing land prices will put a burden on consumers, because it forces real estate businesses to adjust their selling prices to cover costs during project implementation. Therefore, the problem of reducing real estate prices to end consumers is very difficult. This is also an advantage for businesses with stable production and business activities, a long-term land fund allocation process, and a brand and reputation in the real estate market,” Mr. Lien emphasized.
Pham Thai Thanh Truc, director of real estate analysis at ACB Securities Company (ACBS), commented that the new land price list, which is close to the market price, will push up project development costs. This will affect investment efficiency, put pressure on business owners to re-calculate each project and most likely have to increase selling prices to maintain profits. The new land price list will benefit investors with strong financial potential who want to speed up the compensation and site clearance process according to market mechanisms, but at the same time, it will be a big challenge for investors with poor financial situations.
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