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There is no official information about which province will merge with which province, but real estate in many areas has "heated up".
Just a few days ago, there was a series of reports, both from the press and social networks, about the situation of people rushing to buy land in some areas of Phu Tho. Along with that was the increase in real estate prices, in some places up to 50% compared to the beginning of the year.
The cause of this "land fever" is said to stem from rumors of provincial mergers, rumors that Phu Tho will be the headquarters of the new province, on the basis of merging provincial administrative units.
Some other localities have also recorded a "hot" increase in land prices in the past few weeks, such as some areas, especially the border areas between Lao Cai and Yen Bai, between Quang Nam and Da Nang. All due to merger rumors.
The “escalating” real estate prices are somewhat reminiscent of the time nearly 17 years ago, when Ha Tay province merged into Hanoi. According to some Hai Duong real estate investors who often “hunted” for land in Hanoi at that time, before this merger, land prices in some places, especially in Ha Dong (the provincial capital of the old Ha Tay), had gradually increased. The peak was that after about a year, land prices in these areas had increased 5-7 times compared to before the merger.
One of the most obvious impacts of the merger is the shift of the administrative and political center, along with the possible movement of a part of the population. Usually, everything in the center is "hot", such as offices, housing, business premises... This leads to a "land fever".
From an investor’s perspective, it is necessary to clearly recognize the hidden problems behind the “land fever” due to merger rumors. Firstly, when localities merge, they will receive infrastructure investment. Expectations about infrastructure are a reason for the increase in land prices. However, where, how, and for how long the infrastructure will be invested in… are things that cannot be confirmed in the short term. Only real estate in areas with roads and bridges will have the momentum to break out.
Second, it is almost certain that the current "land fever" areas are mainly due to speculators "inflating" prices. In the past, speculators have repeatedly used tricks to build market confidence from virtual, unverified information. They also organize groups of people who specialize in spreading rumors about large-scale land acquisition.
All of this is aimed at increasing the expectation of profit in a certain area, thereby finding an opportunity to buy quickly and sell quickly to make a profit in the short term. Therefore, investors in this type of movement face risks, especially when they have bought land after buying and selling it several times (not to mention the legality of these plots of land).
Third, and most importantly, rumors are just rumors, meaning they may be true or false. If true, investors may enjoy some profits. On the contrary, can the plots of land that have been invested in be sold? It is difficult to say. It is possible that they will end up "dying on a pile of assets" as happened when the real estate market suddenly plummeted at the end of 2022.
Moreover, the overheating of land prices can easily lead to a short-term real estate bubble. The risk of a bubble bursting is entirely possible if the expectations of profitability do not materialize.
Investing in real estate in Hai Duong or other provinces and cities is completely possible, if there is careful calculation based on good information. For example, areas that have policies to develop industry, urban areas, tourism, airports, etc. Real information will shape the real profit value.
Before there is official information about the province merger, investors should direct their cash flow to projects and investment channels with high feasibility.
Knowing how to take advantage of investment opportunities will increase efficiency. This is not wrong. However, investing in real estate in a “blind” way is really dangerous.
TWO WALLS