For several months, Nguyen Ngoc Thanh, a Ho Chi Minh City resident, has repeatedly offered for sale his 5,000-square metre land plot in Bao Lam district in the Central Highlands province of Lam Dong. Despite three rounds of price discounts and accepting a loss amounting to 30 per cent, he still could not find a buyer.
Late in 2021, Thanh had used financial leverage to buy the land plot for nearly $435,000 for speculative purposes. As the plot is in a good location, a buyer immediately asked him to sell at over $540,000, but Thanh refused. Now, as his bank loans reach maturity, Thanh has to sell for debt repayment.
“At a feverish time, people rush to buy at any price, but when the market faces doldrums no-one cares despite the remarkable price discounts,” Thanh lamented.
An experienced investor in the southern province of Ba Ria-Vung Tau, Le Hung is also downbeat at being shackled with many plots of land.
Hung had been snapping up pieces of land for many years, in a province that is deemed a lucrative market with high liquidity. Early in 2022, news lingered that the province had allured many big investors. Hung, as a result, put up all his money and borrowed more from banks to possess many valuable land lots in diverse districts in the province such as Chau Duc, Xuyen Moc, and Phu My.
Not long after that, banks began to tighten credit and the market cooled down. “If you don’t have to borrow from banks, then you don’t have to worry, because sooner or later you will be able to sell. As I had to borrow a relatively big sum from banks amid interest rate spikes, I have struggled to find ways to sell some to take back money for debt repayment,” Hung said.
The cases of Thanh and Hung are not unique. At the end of 2021, suburban real estate became the hunting focus of investors. People rushed to find real estate investment opportunities, and deals became the buzzword everywhere.
Behind the scenes
Meanwhile, the price of agricultural land in many areas has been inflated by local land brokers, attracting scores of speculative investors.
Currently, at many places that used to be hotbeds such as Lam Dong, Dak Nong, Binh Phuoc, Ba Ria-Vung Tau, and Binh Thuan provinces, the air has gone cold in terms of activity.
Experts say that it is no coincidence that the coastal area has been most hunted in recent times. This partly comes from the actual demand as more people want to have garden land to use as a second home.
In addition, the rapid development of the inter-regional connection infrastructure system combined with the rapid urbanisation process in many regions has increased the advantages for suburban real estate. In particular, these areas still have quite a soft price.
Nguyen Xuan Loc, general director of Techcom Real Estate JSC, said that with the amount of available land in central areas such as Ho Chi Minh City increasingly depleted, real estate prices are constantly increasing.
“The opening up of inter-regional connections will bring great opportunities for real estate developers to expand their land bank,” Loc said.
The infrastructure system has been continuously upgraded in Vietnam over the years, including highways, airports, and bridges. Land prices along the connecting traffic routes and the coastal areas have dual benefits thanks to convenient transportation and bolstered trade. Urban, housing, and resort projects are also constantly springing up in the suburbs.
“Infrastructure has supported the process of forming satellite urban areas, prompting the real estate market to expand the area with richer products. Property price has also been escalating by virtue of increasingly comprehensive infrastructure,” Loc noted.
|Suburban real estate market awaits fresh investment wave |
Ushering in 2022, along with tightening planning and procedures, a credit squeeze to the real estate sector has caused the market to fall into a liquidity paralysis, with city suburbs being no exception.
From an investment perspective, Duong Minh Tien, general director of Asia New Time, is quite optimistic. “The real estate market is struggling due to tight credit, but psychology is the main factor causing liquidity loss. A difficult market also provides a golden opportunity for investors to ‘bottom-fish’ and buy real estate at a good price,” Tien said.
Tien added that the real estate market may still face numerous challenges in the forthcoming time, but this is also the right time to purify the market before entering a new bullish cycle.
After a period in the doldrums for real estate in Bao Loc of Lam Dong province, it has shown signs of a reboot after the construction of the Dau Giay-Tan Phu Expressway first phase project had its investment approved by the government in September 2022.
With a length of more than 60km and a design speed of 100km per hour, the expressway is to be implemented under the public-private partnership format with a total value surpassing $434.5 million, in which $56.5 million is to come from the state budget.
Once the expressway is in place, hoped for 2025, the real estate market of Dalat and Bao Loc would enjoy multiple opportunities for development.
In many southern localities, inter-regional connectivity infrastructure is also being promoted. A number of infrastructure projects are in the investment pipeline and are gradually put into operation, such as Dau Giay-Phan Thiet Expressway, which is slated to be put into use by the end of 2022, and Long Thanh International Airport, which is expected to start operating from 2025.
Besides that, a series of other inter-regional infrastructure projects have also been approved for investment and started to be deployed such as Ring Road 3, Bien Hoa-Vung Tau Expressway, Ho Chi Minh City-Binh Phuoc Expressway, and Ho Chi Minh City-Moc Bai Expressway in Tay Ninh province, to name but a few. Most of these works are expected to be open to traffic in the 2025-2026 period.
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