The Thawing Land Market: A Promising Outlook for Investors
The real estate market in Ho Chi Minh City and surrounding areas has shown remarkable improvement in the first quarter of 2024, according to a report by DKRA Group. With low interest rates, favorable legal policies, and positive macroeconomic indicators, the market is expected to recover in the coming months.
Increasing Supply, Decreasing Demand
The supply of land plots has increased by around 18% compared to the end of 2023, particularly in the residential segment. However, the overall demand has decreased by approximately 40% compared to the previous quarter.
The majority of transactions are concentrated in Binh Duong and Long An, with average prices ranging from 16.4-22.2 million VND/m2. The primary market prices have remained relatively stable, ranging from 14.5-23.5 million VND/m2.
Secondary market prices have increased by approximately 1-3% compared to the end of the previous year. The liquidity has also shown positive changes after the Lunar New Year, particularly in completed infrastructure projects with reputable developers.
Similarly, data from Batdongsan.com.vn indicates that the land market has started to thaw. The level of interest in land plots has increased from 44% in the last two quarters of 2023 to 48% in the first quarter of 2024.
In the northern region, the demand for land plots has significantly increased in suburban areas of Hanoi, such as Dong Anh, Long Bien, and Hoai Duc, by 1.7-2 times compared to the first quarter of 2023. In the southern region, the declining trend in interest has halted. Currently, the demand for land plots in District 12, Thu Duc City, and Hoc Mon District (Ho Chi Minh City) has increased by 13-25% compared to the first quarter of 2023.
In terms of price, the selling prices of land plots in the first quarter of 2024 have decreased by 3% in the southern region, while they have increased by 25% in the northern region and 4% in the central region.
Three Driving Forces
Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn, believes that the attractiveness of land plots has returned, with a particular focus on plots priced below 2 billion VND. From the end of 2023 to the beginning of this year, there has been an increasing number of “shark” investors actively seeking large quantities of land plots.
According to Mr. Tuan, the recovery of the land market is driven by three factors. Firstly, there is a cyclical nature to the land market, with an increase in demand typically seen in March (after the Lunar New Year).
Secondly, land prices have adjusted in certain areas, attracting investors to enter the market. Many provinces in the southern region, such as Ba Ria – Vung Tau, Long An, Lam Dong, and Dong Nai, have seen current land prices decrease by 12-19% compared to the beginning of 2023.
Lastly, there is anticipation surrounding the implementation of three new laws, which will take effect in 2025. The stricter regulations on land subdivision are a hot topic, and it is predicted that the supply of subdivided land plots will significantly decrease after 2025. However, the long-term demand for land plots is expected to remain high due to the Vietnamese preference for this type of investment. When demand outweighs supply, land prices will rise. Many investors want to stay ahead of this trend and start looking for land plots before the new laws come into effect.
According to DKRA Group’s forecast, the new supply of land plots in the second quarter of 2024 will improve compared to the first quarter, with a concentration in the surrounding areas of Ho Chi Minh City, totaling between 550-650 plots.
The market liquidity is expected to continue increasing, with strong performance in Binh Duong, Dong Nai, and Long An in terms of supply and primary market consumption in the second quarter of 2024. The primary market prices are expected to remain stable, while the secondary market will see positive improvements in liquidity and selling prices.
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