Investors quietly buy suburban land, waiting for the Land Law to take effect

Since the end of 2023, Ms. Tran Thi Nham's group (a real estate investor in Hanoi) has been continuously "hunting" for large land funds in many provinces and cities around Hanoi. Recently, Ms. Nham's group bought a number of plots of land in Bac Ninh, Bac Giang... each plot's area ranges from 80 - 300 m2.

“These areas have seen strong price fluctuations in recent years. However, to make good profits, we will look for plots of land in low-lying areas, where prices have not fluctuated much, only around 10 million VND/m2, but in our opinion, they have a lot of potential,” said Ms. Nham.

According to Ms. Nham, the real estate market is showing signs of warming up, while bank interest rates are still low, so the cash flow in the coming time will certainly flow into real estate. In particular, from August 1, 3 important laws related to the real estate market, namely the Land Law, the Housing Law and the Real Estate Business Law, will take effect, real estate prices are likely to increase, so this is a good time for investors to "hunt for goods".

In addition to Bac Ninh and Bac Giang, Ms. Nham's group also bought a large amount of commercial and service land and auctioned it from people in Hanoi in the area who wanted to transfer it. This investor said that as long as the seller's price was suitable, the group would pay to buy it.

Similarly, since the beginning of this year, Mr. Tran Van Tao (Hanoi) and his friends have also been urgently looking for opportunities to invest in land plots located near Hanoi's Ring Road 4. After half a year, the group has completed a number of transactions with a total value of up to tens of billions of VND. "Currently, we have targeted a number of plots of land located on major roads but have not been able to complete the transaction because we have not reached an agreement on the price with the landowner," said Mr. Tao.

According to Mr. Tao, real estate prices in some areas near Ring Road 4 are gradually increasing again compared to the end of 2022 and the beginning of 2023. Many plots of land that were once advertised for sale at a loss of 10-30% are now recording an increase in price again, although not as much as the land fever in early 2022.

Price Gouging Before Land Law Takes Effect

Commenting on the trend of investors increasing land purchases at this time, Mr. Nguyen Tho Tuyen - Chairman of BHS Group - said that when the 3 new laws come into effect, the market will move to a new phase, the price level of real estate products will increase. Investing at the present time, investors will have the opportunity to choose products that are legally completed and have more suitable prices.

Currently, low-rise real estate with clean legal status and auctioned land in the provinces are the products that investors are targeting in the current context as a safe asset channel. Therefore, most of them want to buy now to have the advantage of price and the opportunity for price increase in the future.

Sharing the same view, Mr. Dinh Minh Tuan, Director of PropertyGuru Vietnam in the Southern region, also said that there has never been a precedent where a new law has been passed and real estate prices have decreased. On the contrary, the new legal framework from the 2024 Land Law will increase project implementation costs.

According to Mr. Tuan, one of the most important points of the 2024 Land Law is to remove the old land price framework, instead, based on the purpose, land use period, input information, other influencing factors... to determine the price. The new land price table is close to the market price, causing the land-related budget such as land clearance costs, land recovery compensation, and land-related taxes and fees to increase.

Basically, land owners will benefit more. These regulations contribute to increasing the price of land from project land, agricultural land, non-commercial land and many other types of real estate will also increase.

Ms. Giang Do, Director of Savills Vietnam Consulting Services, analyzed that according to the new Land Law, land prices will be determined according to market principles, which may cause real estate prices to continue to increase. Because at that time, the compensation for site clearance will no longer be as low as before, the period calculated according to the land price list, but closer to the market. This will lead to an increase in the total investment cost of the project. To ensure their rights, investors will have to increase the selling price of products at the projects.

Therefore, many investors have started to return to the market, buying land plots with good prices and legal documents to prepare for new market developments.