The Hanoi property market is once again seeing a wave of increased land prices in suburban areas, thanks to rumours of some of the Vietnamese capital’s districts being developed under the model of “city within a city”.
The first land price rise in those districts, including Dong Anh, Soc Son and Me Linh, happened in March after information came out about the Red River urban planning project.
The project is still in the planning phase and is expected to be approved at the end of this year. However, land prices are now increasing again in those districts because of rumours of further development in those areas.
A plot of land near Dong Do Lake in Soc Son is currently valued at 12 million dong ($530) per sqm, much higher than that the five million dong evaluation last year, according to locals.
Land prices in Soc Son’s Minh Phu commune have risen by 30 per cent year-on-year, and surged to 10-12 million dong per sqm in Minh Tri commune, from seven-to-eight million dong at the beginning of this year.
However, according to locals, most of the land on sale in those villages lies in protected forest areas. Careless buyers could buy forest land and be unable to build on it, the Vietnam News Agency reported.
The property market in Me Linh has been frozen for a few years because of the development of 50 urban projects, invested by private capital. However, the projects, over a total area of 1,905ha, have been suspended due to a lack of capital.
But real estate brokerage centres have returned to Me Linh due to rumours that the district is slated to be converted into a city, pushing land prices up by 30-40 per cent.
Me Linh-based real estate broker Nguyen Nam said: “Every time there is new information relating to the Red River urban plan, land prices in those districts increase.
“Investors are interested in regional planning; if there is investment potential, they will visit the land areas and quickly make investment decision.”
Meanwhile, Dong Anh has always had a busy real estate market thanks to its location near inner-city districts. The district has promoted infrastructure development for many years.
Thanks to rumours of the development of a ‘city within the city’, investors are paying more attention to land investment in Dong Anh, causing land prices in some communes like Vinh Ngoc, Hai Boi and Xuan Canh to increase 15-20 per cent, and even 40 per cent is some places.
A representative of the Me Linh District Land Fund Development Centre said land prices in Dong Anh, Soc Son, Me Linh and Hoa Lac are increasing, but there have not been many successful transactions.
In the future, Me Linh will enhance site clearances and build infrastructure to continue auctioning land plots in the district. The district will also publicise planning information and progress on infrastructure development projects, to prevent further rumours concerning land prices and speculation.
Regarding the rise in prices of land in those districts, Vietnam Real Estate Brokers Association chairman Nguyen Van Dinh said people tend to pursue investment opportunities in suburban districts such as Soc Son, Dong Anh and Me Linh, due to low property supply in the inner districts.
Along with the rumours relating to the Red River urban planning, land prices in those markets too have been pushed up to very high levels, Dinh said.
However, as few investors seek long-term investments, land prices usually shoot up over a short time period before falling back to their usual levels, according to Dinh.
Hanoi plans to develop the five suburban districts of Hoai Duc, Dong Anh, Thanh Tri, Gia Lam and Dan Phuong into inner-city districts by 2025. With a large land fund, these districts will be key residential development regions in the future, Dinh said.
This year, the four districts of Hoai Duc, Dong Anh, Thanh Tri and Gia Lam account for 30 per cent of apartment supply. This figure is expected to increase to 36 per cent by 2023.
Savills Hanoi advisory services senior director Do Thu Hang said that “when the land fund in the inner city becomes limited, investors also tend to expand to the suburban areas”.
“In addition, improved infrastructure also contributes to promoting the tendency of people moving away from the city centre,” Hang said. “When the future supply is in remote areas, it will bring more options in terms of location and price.”
Experts note that investors looking to buy real estate in the Vietnamese capital today need to consider the lifetime of the investment, especially in suburban districts, all of which have planning and large projects in the pipeline, even though transport infrastructure connecting to the inner city is still developing. Hence such investments will not be profitable in the near term.
Before deciding to invest, buyers need to look into planned projects and land prices. This will help them avoid buying land plots without legality and abandoned projects, according to Le Trung Kien, the de facto leader of Dong Anh.
VIET NAM NEWS/ASIA NEWS NETWORK