“Land Market: Brokers Eager to Profit, but Challenges Await!”
The land market is showing signs of a rebound, and brokers with dual roles as investors are looking to make some quick money. These brokers are taking advantage of lower prices to “ride the wave” and make a profit. When landowners lower their prices by 300-500 million VND per lot, brokers quickly put down deposits and obtain bank loans as a backup plan (in case they can’t sell the land). In some cases, brokers even borrow the full amount from the bank, equal to the price of the land, just to secure the property. Their expectation is to quickly sell the land at a higher price or wait a few months for the market to pick up.
However, it is not uncommon for brokers to end up selling at the same price they bought the land or even lower, as finding buyers can be challenging. Meanwhile, they still have to pay back their bank loans. In fact, even when they significantly reduce the price, they still struggle to find buyers. This situation has caused brokers to face difficulties in selling off their inventory, while also burdened by bank loan pressures.
The combination of good inventory and low-interest rates is enticing brokers in the real estate market. These brokers have experience in speculating on the market and expect to profit from the price difference in properties that landowners are selling at a loss. However, the slow recovery of the real estate market has made it difficult for brokers to find buyers, while also dealing with heavy loan repayments. Recently, some land lots in District 9 (Ho Chi Minh City) purchased by brokers still remain unsold due to the market not fully warming up yet.
“Most of the time, brokers can gauge the potential customers interested in a particular property. When the market is hot, brokers can quickly secure buyers for good-priced lots, but now they have to wait. After not being able to sell for about three months, brokers have to find ways to push their inventory because of their bank loans. However, not every case is successful. Many brokers hold onto the land and continue repaying their loans,” said Mr. T, a long-time investor in the Eastern area of Ho Chi Minh City.
The land market has shown positive signs in the first few months of 2024. Many land transactions with complete legal procedures and prices below 2 billion VND have been successfully closed. Sharing the market situation in the first two months of the year, Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the southern region, stated that since the beginning of December last year when the draft Land Law (amended) was actively discussed, land investors have started to re-enter the market.
According to Mr. Tuan, the buyers and sellers in the land market during this period are mostly individuals who have recently matured their time deposits and have capital of around 1-2 billion VND. With this amount of money, if they invest in gold or land, and with gold prices currently soaring, they choose to invest in land.
A report on the real estate consumer psychology by Batdongsan.com.vn also shows that 61% of respondents intend to buy real estate within the next year. Among them, 59% plan to invest, and land is the type of property that potential buyers are most interested in (40%), followed by apartments (28%) and houses (21%).
This has proven that “land” is still one of the most favored segments of investment for Vietnamese people, as it brings significant returns. The number of land transactions is starting to increase rapidly again, although the overall real estate market prices have not shown clear fluctuations.
According to experts, in 2024, the real estate market as a whole still faces many difficulties and uneven recovery across segments. However, the market has overcome its worst phase and is expected to have more positive than negative developments in terms of overall supply and demand, as well as input and output.
Looking at the long term, land prices may continue to rise, and transactions will pick up again. This is because the price of real estate depends on other factors such as infrastructure development, economic growth, and people’s income. Due to the mindset of “land is as precious as gold,” the demand for owning land and real estate to accumulate wealth is significant among Vietnamese people. Therefore, it is not surprising that land is receiving the most attention from consumers in 2024.
Regarding whether it is a good time to invest in land this year, experts believe that the market will truly show clear signs of change in the second or third quarter of 2024. Currently, it is still a stage of exploration and waiting. Investors using financial leverage should not participate in the land segment at this time. However, for large investors with strong financial resources, this period is an opportunity to seek potential investments.
When the amended laws are applied from January 1, 2025, the supply of land will decrease as developers are restricted from dividing and selling lots. At that time, land prices may enter a new cycle of increase. In previous law adjustments, land prices only went up and never decreased. The period between 2024 and 2025 may be the last chance for end-users, especially those with actual needs but still a challenging period for developers. Therefore, investors should carefully consider before making a move.