SEZs still on paper, but land prices continue to escalate

The land prices continue to escalate

The Ministry of Construction has sent a dispatch to provincial authorities of Khanh Hoa, Kien Giang and Quang Ninh, where Bac Van Phong, Phu Quoc and Van Don SEZs will be developed in the future, asking them to take action to control land prices in the localities.

The urgent instruction was made after mass media reported ‘land price fever’ in the provinces. People are rushing to buy land plots as they believe that land prices would soar later when SEZs take shape.

The ministry expressed its concern that the land price escalation would affect the sustainable development of the real estate market and create a real estate bubble.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate, commented that the majority of ‘land hunters’, about 60-70 percent, on Phu Quoc Island are Hanoians.

Duc believes that Hanoians are richer and are willing to buy land ‘at any price’, because investment in real estate is the easiest way to make money.

“The real estate brokers in Phu Quoc are also from the north,” he said. “HCMC has better economic achievements than Hanoi, but Hanoians seem to make money more easily,” he commented.

“They (Hanoians) are not only pouring money into Phu Quoc, but also Da Nang, HCMC and other SEZs,” he said.

Le Hoang Chau, chair of the HCM City Real Estate Association, cited a report of the Da Nang municipal authorities as saying that 15 percent of property investors in the sea city are from HCMC, 10 percent from Da Nang, and the remaining from the north, especially Hanoi.

Savills Vietnam reporter that of 1,000 land plots, beachfront villas and apartments sold in Da Nang, 80 percent of transactions were made by investors from Hanoi, while only 15 percent were from HCM City.

Chau warned that the land price escalation is contrary to Vietnam’s policy on setting up SEZs.

“This is the third time Phu Quoc has seen ‘land fever’ in the last 10 years. This will do harm to the sustainable development of Phu Quoc,” Chau said.

Phu Quoc, as an SEZ, can attract authentic investors, but they may shrink back because of high land prices, Chau said.