Land Price in the Suburbs of Ho Chi Minh City Reaches USD 2,300/M2
Taking Ben Thanh market (District 1, Ho Chi Minh City) as the center, within a radius of 3-15km, the cheap land fund is rare, pushing up the price of land in the suburbs.
Observing the Ho Chi Minh City real estate market for more than a decade, General Director of Nam Phat Investment Consulting Company, Nguyen Mac Hoai Nam assessed from Binh Chanh, Binh Tan, Tan Phu, Nha Be to Can Gio, Cu Chi and Hoc Mon have recorded increases in land prices.
According to Mr. Nam, there are many reasons leading to the continuous escalation of land prices in the suburban areas, but they can be summarized into 5 main reasons.
First: Take Ben Thanh market (District 1, Ho Chi Minh City) as the center, within a radius of 3-15km, cheap land is rare. This spurred a wave of land hunting in the suburbs for cheaper land prices and the expectation of future price increases became stronger and stronger. Currently, the number of land plots or townhouses in the projects is not much, so it also leads to an increase in prices.
Second: The traffic system connecting the central areas with the suburbs has been significantly improved, the traffic has become more convenient. When the long distance is no longer a psychological barrier, the suburbs with better land prices than those near the center become the bright spot of the market.
Third: The mentality of owning landed real estate is too strong. The long-standing custom of Vietnamese people is that whether rich or poor, they like to buy land as wealth accumulation even though that land is located in a remote area. This increases the demand for suburban land hunting, plus housing prices in the inner city of Ho Chi Minh City have also skyrocketed in the past year, causing neighboring land prices also gain increasing momentum.
Fourth: Conglomerates and profiled developers are gradually decentralizing to develop urban-scale projects. Those are the massive advances of these giants that make the housing projects in the suburbs become exciting. Powerful, long-term marketing strategy with many sophisticated techniques in graphics and design that can turn these lands from a monotonous image to a modern and civilized one, pushing the price leap.
Fifth: Investors and real estate speculators are diversifying investment types, previously mainly in apartments, now moving to landed properties, increasing the demand in the market. When the demand to buy land is increasing, the market follows the trajectory of water flowing to the lowland, the suburban areas still have a lot of land, so they will be hunted more.
According to Mr. Nam, although land prices in the suburbs are constantly escalating, the rate of price increase is too fast, there are many places where land prices are pushed to a threshold far beyond expectations, which is not beneficial for the real estate market. Because, this accumulation for a long time will form impossibly high price levels, difficult to adjust to true value, creating potential real estate bubbles.
This expert advises investors to be careful when trading land in the suburbs, especially not using financial leverage. Because according to the law of the market, any investment channel with huge profits will come with huge risks.
Landed property project in Long An province. Photo: Trung Tin
At the end of 2021, the highest land price in Long An reached VND 52.7 million/m2 (~USD 2,300/m2), surpassing Binh Duong and Dong Nai
The report summarizing the southern land market in 2021 of DKRA Vietnam said, in the past 12 months, the land segment in Ho Chi Minh City and neighboring provinces recorded 46 projects for sale with a supply of about 6,220 plots. Long An and Dong Nai are the two provinces leading the supply of the whole market with about 68% of the total new supply, of which the asking price of land plots in Long An is setting a new price level higher than many other provinces.
As of the last quarter of 2021, the highest average asking price of land plots in Long An reached VND 52.7 million/m2 (~USD 2,300/m2), Dong Nai recorded VND 45 million/m2 (~USD 1,970/m2), Tay Ninh and Binh Duong reached VND 15-25 million/m2 (~USD 650-1,100/m2). This survey is only based on the asking price of newly land plot supply in the southern provinces.
Last year, the consumption of landed properties in Ho Chi Minh City and surrounding areas reached about 4,697 properties, equivalent to 76% of new supply. However, Ho Chi Minh City alone has only 2 new projects for sale, providing about 98 properties to the market, equal to 17% compared to 2020. The consumption rate is about 52% (equivalent to 51 plots), equal to 15% over the previous year.
The landed projects in Ho Chi Minh City are small-scale, concentrated mainly in suburban districts such as Binh Chanh, Cu Chi, Nha Be… The land segment in HCMC is mainly recorded at the old projects from previous years. The asking price of land in the city by the end of 2021 recorded the highest level of VND 97 million/m2 (~USD 4,250/m2) and the lowest VND 48 million VND/m2 (~USD 2,100/m2).
While the supply of land in Ho Chi Minh City is increasingly scarce, the market in neighboring provinces such as Long An, Dong Nai, Binh Duong, Ba Ria – Vung Tau has become the main source of supply.
According to DKRA, in 2021 due to the impact of the fourth Covid-19 epidemic, the liquidity of land in the southern provinces on the secondary market (resale) is only average. During the period of social blockade, the price level tends to decrease locally. Large-scale projects, diverse internal utility planning, convenient location in connection with surrounding areas and legal clearly have a higher success rate of transactions than small projects.
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