Trust crisis regarding land’s legality
Mai Thanh, an investor in Tien Giang, shared her story with tears as she has lost all of her life-long savings from fraudulent property sales. The property belongs to a “ghost project” based in Binh Tan. It was originally planned to be used as a greenery plot with a ban of subdivision or sale of land, but its developer still pledged the legality of the land and sold it. “I was tricked without knowing it. It was only when reading the newspaper that many other people called for help to know that I was also a victim. Now I do not dare to invest in land, especially cheap land,” Thanh said.
From Thanh’s story, experts advice buyers to verify the legality of properties before purchasing. However, many have fallen by the trick of “pay less – earn more” and throw their money into investment without making essential audit steps to avoid risk. “Buying a property has mostly been based on trust, rarely a case when buyers actually conducted property audits. Additionally, most people don’t even understand what on the construction plan of the project,” Ms Thanh stated.
Similarly, Hong Tram, a land investor in Ho Chi Minh City, worried when looking for lands to buy. “Buying project land has never been this difficult due to the situation of “ghost projects”, not to mention the constantly rising property price and the lack of real estate supply,” Tram said. As it currently stands, it is challenging to invest in project lands even if investors have a generous amount of money due to the lack of legality. At the time when legal documents like Certificate of Ownership or construction plan are too easy to be counterfeit, rarely an investor who brave enough to invest in the market.
According to data of Batdongsan.com.vn, there has been a rumour of fraudulent projects that selling illegal lands in Ho Chi Minh market. “He cries wine and sells vinegar” is what describe the situation in the Southern market. Fake certificate, fake construction plan, with nice promises of future profit is what used to trick the naive investors to pour the money in these “ghost projects”. News and advertisement of these projects are all over the internet. Fake brochures are easily found around suburbs districts like District 12, Binh Tan, Nha Be, District 9, or Thu Duc. Other markets as Long An, Vung Tau, and Phan Thiet, are in the frozen stage due to illegal subdivision and sales. Agricultural and aquaculture lands after, a makeover, suddenly become residential land and offered for sale...
Buyers’ hesitation has downturned market trend
Giving explanations on project land market, Duong Thuy Dung, senior director of CBRE, said that the land market is currently very dull and gloomy due to the scarce supply and the legal crisis taking place on a large scale. The hunt for perfect legal land with nice location in Ho Chi Minh City, Long An, Binh Duong, Dong Nai, Ba Ria - Vung Tau,... has been too challenging as limited units currently offered for sales belong to the secondary market and there have been no new projects deployed. Besides, many land projects are subject to land inspection, which related issues such as licensing are halted.
These factors make the land market tumble after a strong development period. Moreover, the shortage of supply has created the chance for many individuals to take advantage of the people's psychology, launching ghost projects to benefit on the lightness and lack of awareness of customers.
According to experts, the main force participating in the land market is investors, which most of them aim for speculation and surfing as lands have the highest rate of difference. In the context of high land prices, projects with the title “soft price” are easy to catch the eyes of small investors. Investing in project lands is quite risky it is not an income-generating product. Investors can only make a profit by reselling the land at a proper time. However, the value of a property depends heavily on its “reputation”, which can easily break down by adverse market trend or legal problems. Additionally, for the main purpose of speculation, when there are adverse market trends, investors are unable to sell at the expected price as expected and often lower than what they have paid.
From the current situation, it is foreseen that there would be a big change with high fluctuation in land price and transaction volume of Ho Chi Minh market by the end of 2019. For residential lands with a certificate, the demand and market price are expected to continue rising due to buyer’s psychology.
