The 2024 Land Law allows individuals who are not directly involved in agricultural production to receive transfers of rice-growing land. This is an opportunity for potential investors, but this “piece of cake” is not easy to eat.
If in the past, only those who directly produced rice were allowed to receive the right to use rice land, with the new current regulations, individuals who are not directly involved in agricultural production, if they have the conditions and ability to grow rice, are also allowed to receive the right to transfer land to invest in production.
At a recent real estate seminar, Mr. Le Van Binh, Deputy Director of the Department of Land (Ministry of Natural Resources and Environment) said that when the 2024 Land Law comes into effect, this segment will develop vigorously.
In fact, in the period 2020-2022, the agricultural land transaction situation was quite hot. Many businesses and individuals bought agricultural land with the purpose of converting it into plots for sale, creating a fever at that time.
Although the market is expected to be more vibrant, in reality, the agricultural land and forest land segment is only of interest to large, organized investors such as enterprises. Because the new regulations only create favorable conditions for farmers and are suitable for enterprises investing in the agricultural sector, while the activities of collecting and purchasing agricultural land and waiting for the purpose to be converted, dividing and selling plots of land for small investors will be very difficult to implement.
Ms. Ha Kien, a broker and land investor in many segments in Hanoi, Hoa Binh, Thai Nguyen, shared that currently the agricultural land segment is still "quiet" because the tax and conversion fee for agricultural land and forest land is quite high, so small investors do not invest in this segment. Instead, the "big guys" who need to invest up to tens of hectares of rice land, forest land, so that they can later re-plan it into service land, tourism, trade, housing projects... seem to be excited to join the game.
The leader of a real estate company in Hanoi shared that his company is planning to "hunt" for large-scale forest and agricultural land in Hoa Binh and Thai Nguyen, and even "fish far from shore" by going to the Central Highlands to buy land.
Regarding the conversion of agricultural land, Mr. Le Van Binh noted that it is necessary to follow the planning and comply with the target of more than 3 million hectares of rice land to ensure national food security. Therefore, real estate investors need to be careful and understand the provisions of the law to avoid ineffective investment, buying at high prices but having difficulty in liquidating.
According to the Vietnam Real Estate Brokers Association, in the first 6 months of 2024, the land segment has improved with auctioned land and subdivided land. Meanwhile, project land and agricultural and forestry land have not shown signs of recovery, with gloomy liquidity and slow transactions. Even many investors holding agricultural land want to sell their goods at this time, but it is difficult.
The director of a real estate brokerage analyzed that the investment profit margin of this segment is about 25-30%/year, if it can be converted to residential land, it will reach 35-40%/year. The opportunity for agricultural land to increase in value over the decade can increase 3-5 times in value, or even higher. However, according to the expected land price list, to complete the application for converting residential land for agricultural land, the cost will increase 9 times compared to the present.
For example, if an investor wants to change the purpose of use and separate a 1,000 m2 agricultural land plot in Dong Anh (Hanoi), the current land use fee is 6.6 billion VND, but if calculated according to the price of the new draft price list, this amount increases to 61.8 billion VND. Thus, the land use fee alone for a 100 m2 plot of land is more than 6 billion VND. At this price, people buying available residential land is cheaper than the tax to be paid when converting agricultural land.
In addition, the 2024 Land Law stipulates that agricultural land that is left fallow or unused continuously for 12-24 months will be subject to administrative penalties and may be revoked. Thus, investors holding agricultural land will have to quickly complete procedures to convert it to residential land or convert it to farming if they do not want to lose everything.
“If you buy land to catch the investment wave, following the planning, but the regional planning is suspended, slow to implement or adjusted, investors may face the worst scenario of selling without anyone buying. In addition, buying agricultural land, especially plots that cannot be converted, the risk of bankruptcy can also occur if financial leverage is used,” an investor discussed the risks of holding agricultural land today.
Source: https://baodautu.vn/batdongsan/phan-khuc-dat-nong-nghiep-van-im-hoi-lang-tieng-d222126.html
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