HCM City seeks to bring down soaring land prices

Signs advertising land for sale in HCM City’s District 9. Photo realestatevietnam.com.vn

One of the hotspots is District 9, where land prices are climbing daily.

The office of the district’s People’s Committee is packed with people every day, looking to settle administrative records related to land, including adjustments, renewals and extension of land-use rights certificates, according to local media reports.

Many of the visitors to the office are mortgaging their land-use rights to borrow bank loans.

Notary offices in the district are also busier than ever, with many people completing procedures for land transfer.

Speculators are focusing on land in the district’s Tăng Nhơn Phú A and B wards, including on the streets of Lò Lu, Nguyễn Xiển, Lã Xuân Oai, Võ Văn Hát and Nguyễn Duy Trinh, according to a representative of a land registration office in District 9.

Land plots that have certificates of land-use rights are being traded at a brisk pace at high profits, attracting many speculators, local real estate agents have said.

One cause of the rush is the deadly fire at the Carina apartment complex in District 8 last month. More buyers are looking to invest in land and houses instead of apartments.

Lê Hoàng Châu, chairman of the HCM City Real Estate Association, said the real estate market was in danger because of the skyrocketing prices.

To make the most effective investment, buyers need to be aware about legitimate and accurate land information.

During the last five years, the average price of land in Phước Long B Ward in District 9 soared by 130 per cent, while in Thủ Đức District prices surged by 170 per cent, according to a local real estate company.

At a recent meeting of the HCM City People’s Committee on the separation of land plots allowed under a city decree, Trần Vĩnh Tuyến, vice chairman of the People’s Committee, issued a warning letter about the possibility of a property bubble.

Tuyến said land brokers and speculators were giving false information in order to raise prices and that very few people know the real value of land.

Some people are basing their decision to buy land on information provided by officials with whom they have a connection. But some officials might give “false information” because of their own “personal interest”, triggering spikes in land prices, according to Tuyến.

The city authorities have demanded that district authorities and agencies solve the problem as soon as possible, he said.

Phạm Lâm, general director of DKRA Việt Nam, said the land fever would lead to a real estate bubble unless it was controlled in a timely manner.

Stricter regulations

Late last year, the city’s People’s Committee amended a regulation by allowing large plots of land to be divided into smaller plots.

Though it took effect early this year, the city’s Department of Planning and Architecture recently decided to amend the regulation again, making the procedures much stricter, especially in new residential areas.

According to the recently amended regulation, land buyers of large plots now have to build new roads before they divide the land in new residential areas.

District authorities also must draw up detailed planning (1/500 scale) for new residential areas where land plots are separated for sale.

Plans for land separation in new residential areas where new roads will be built along with surrounding infrastructure must be approved by the Department of Planning and Architecture.

The department will then comment on the plan in written form after a maximum of 15 working days from the date of receipt of the official letter sent by the district.

Nguyễn Thanh Toàn, deputy director of the Department of Planning and Architecture, said the criteria stated in the guidelines for land separation in new residential areas would be applied consistently in all 24 districts.

The city’s aim is to slow down speculation, according to authorities.

Trần Khánh Quang, general director of Việt An Hòa Real Estate Consultant JSC, agreed with the city’s new stricter regulation. Investors who want to divide land plots for sale in new residential areas would have to spend more time and money to do so.

Phan Công Chánh, a real estate expert, said: “The new regulation will force investors to bring products to the market more slowly and will add costs, which would have to be passed on to the customer.”

“Depending on the purpose of the individual, if only one or two land plots are separated, the new regulation will not affect the investor much. But investors who separate a large amount of land plot for sale will face more challenges,” he noted.

Against the backdrop of land fever, real estate experts said that buyers should be cautious before investing in land plots.

Nguyễn Xuân Lộc, general director of realty company Techcomreal, said that buyers should only choose projects that have legitimate building permits and easy access and connections to infrastructure.