Land hunting following rumors of city-province mergers: Investors need to be alert

Recently, the news of merging provinces and cities has become a topic that many people use to sell real estate. According to a survey by Dan Tri reporters, land plots in many localities have become bustling with the above information.

For example, in Viet Tri City (Phu Tho Province), the selling price of land in communes and wards such as Thanh Mieu, Gia Cam, Tho Son, Bach Hac, Song Lo, etc. has increased sharply compared to the end of last year. According to Mr. Tu, a broker in Phu Tho, since the beginning of March, many people have flocked to Ben Got urban area (Tho Son ward, Viet Tri City) to see the land. Before Tet, the land price in this area was about 13-15 million VND/m2, but now the selling price has increased to more than 20 million VND/m2.

Some brokers use rumors about provincial mergers to sell land (Screenshot).

Faced with the above situation, the Department of Construction of Phu Tho province warned that the high land prices could be just a trick of land brokers. At the same time, it said that the functional units will check and grasp the information for handling.

According to information from the Vietnam Association of Realtors (VARS), in localities across the country, just a few weeks after the information about the proposal to merge provinces and cities, land prices in some localities have been pushed up, in some places up to 20%.

Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Realtors (VARS) - said this development is not new to the Vietnamese real estate market. Market history shows that whenever information about new planning appears, land prices in the related area often increase sharply in the short term.

The main reason comes from the FOMO (fear of being left behind) mentality of investors. Faced with this information, they appear more urgent and hasty in their decisions to "put down money". With a strong belief that change will certainly lead to economic and social development, along with an increase in real estate prices.

At this point, the decision is also motivated and resonated by the prediction that the adjustment of land price tables in the coming time in localities will indirectly push up land prices. However, in reality, most of these price increases are speculative in nature. Because even if there are administrative changes related to the merger decision, it is not certain that it will lead to outstanding development in the areas, at least in the short term, especially in the context of real estate prices being pushed up compared to the income of the majority of people in recent times.

Therefore, hasty decisions without careful research and evaluation of information will cause investors to face many risks. As a result, many investors have their capital tied up and do not have enough strength to last until real estate prices really increase.

Mr. Dinh gave an example: when information about the upgrading of some suburban districts in Hanoi or Ho Chi Minh City to districts was released, land prices immediately increased "skyrocketingly". However, many areas without investment in infrastructure quickly fell into a "deflated bubble" state, prices turned to decrease after the "fever" passed.

Real estate investors need to be careful when following rumors.

Mr. Pham Duc Toan - real estate expert - said that up to now, planning information has always had a strong impact on the real estate market. For example, in the past, planning information about Dong Anh or Hoai Duc districts becoming districts also caused land prices in the area to increase many times.

Recently, some localities are rumored to be administrative centers after the merger, real estate has been somewhat vibrant. The nature of the real estate market is buying and selling according to expectations.

People who buy based on rumors now hope to make the right choice and that prices will increase sharply in the future. Not only small investors, but also some project investors, when hearing rumors of mergers, also stop selling and wait for official information that prices will increase sharply.

A plot of land on the outskirts of Hanoi (Photo: Duong Tam).

Mr. Toan said that some people accept risks to seize the opportunity to make big profits. However, investors following rumors is very risky, especially for those who use borrowed capital to "surf". Therefore, investors need to research carefully and should wait for official, clear information.

According to him, in the long term, after the merger of provinces and cities, infrastructure will be invested in systematically. From there, local price increases may occur in the real estate market where the administrative center is located. In places that are not located as administrative centers but have high real estate prices, they may have to be adjusted. However, he said that this will take a long time, until the infrastructure is invested in completely and systematically.

Sharing the same view, the chairman of VARS said that the merger of provinces and cities will have a positive impact on the real estate market. Accordingly, the merger may help reduce some legal procedures for project implementation, helping the market have more supply, especially in the affordable housing segment, people will have more options to buy houses at more reasonable prices.

However, for real estate value to increase sustainably, there must be a foundation, which means there must be synchronous development of traffic, economic and social infrastructure such as opening more major roads, metro, schools or the ability to generate cash flow from leasing.

According to Mr. Dinh, land fevers based solely on news without accompanying development investment plans often have short cycles, increase rapidly but are difficult to maintain at high levels for a long time. Therefore, investors need to be extremely careful before "virtual fevers". Because "land fevers" based on rumors often only benefit a small group of speculators. Meanwhile, the majority of individual investors and real buyers are at risk of getting stuck if they buy at prices that have been pushed up too high.

In fact, after each land fever, many investors who bought at the peak of the price had to bury their capital for a long time or accept losses with poor liquidity. Even many groups of confident investors with experience in "surfing" failed many times when they could not sell their goods in time.

To avoid falling into "virtual" fevers and ensure expected profits, investors need to be alert and avoid being swept away by the crowd mentality. Investors also need to carefully study the land price level in the area they plan to invest in and understand the progress of planning changes to assess risks and growth potential.

Buying when prices have increased sharply often comes with much greater risks than expected profits. Places with specific planning and infrastructure development or projects with synchronous and modern investment, with many policies to "attract" people to live will be safer choices than areas where prices are only pushed up based on rumors.

Source: https://dantri.com.vn/bat-dong-san/san-dat-theo-tin-don-sap-nhap-tinh-thanh-nha-dau-tu-can-tinh-tao-20250319175539932.htm