Whirling in the land fever
After Tet, the real estate market has witnessed the emergence of a local land fever matrix. In particular, Danang, Van Don (Quang Ninh) and Nhon Trach (Dong Nai) have been viewed as ‘focal points’ of the market where the number of transactions has suddenly increased with a galloping boost in land price in certain areas.
In Linh Chieu and Ngu hanh Son districts (to the northwest and southern of Da Nang), land prices strongly fluctuate, with some VND 500 million lots could double to one billion within 1–2 months. Especially, the price escalation of coastal lots has been substantially higher, from VND 9 to 10 million per square meter compared to pre-Tet.
Despite having a vibrant real estate market right after the transaction reopening decision, it was not until after Tet holiday that the land-hunting movement to Van Don (Quang Ninh) became truly bustling. Foundation soil land plot projects were sold out expeditiously with most of them were name-shifting or transferring between investors and brokers. According to statistics, land prices in areas such as Cai Rong, Thong Nhat urban area, etc. was boosted with a 30% increase.
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Meanwhile in Nhon Trach (Dong Nai), VND 1.5 billion lots were quickly out of stock. The depletion in land for sale situation is similar to many other real estate segments.
In Dai Phuoc and Phu Dong, which are adjacent to District 2 (Ho Chi Minh City), prices were increased by at least 20% within 2 months. Furthermore, prime locations witnessed an even higher surge in price at 30-40%, over the same period.
The local land fevers have led to the invasion of investors from other provinces for hoarding properties.
A risky gamble!
According to investors, land fever normally lasts from 1-3 months or up to 6 months. During this time, land price is pushed up quickly with good liquidity and strong hand-out transactions. There are cases of investors making a few hundreds of millions to billions in a blink of an eye, creating a risky rush into the market for deposits and profits.
In reality, at the time when the real estate market in some localities is still budding and easily affected by decisions and policies of government management agencies, the risk of losing all of the investment capital is alarming compared to the possibility of earning billions. This threat alongside other conflicting market information require maximum cautious of investors when making any decision.
“Many people are blindly investing in land without paying attention to the legal issues which are typical in Van Don. When uncompleted legal terms and uncertainties about the ‘pink book’ still remain with foundation soil projects, all of the investment will be frozen if there is strong inspection from authorities in Van Don on changing land - use purpose or tightening the process of legalizing the Land Use Right Certificate. That’s why jumping into a heating market means facing great capital risks”, said Mr. Quang Minh, an investor in Van Don.
Stories of the Van Don market over half a year ago, and the collapse of Da Nang real estate market at the end of 2017 are clear examples of the bad consequence of uncontrolled buying and selling during land fevers.
From a different perspective, Mr. Duy Tai, a director of real estate in Da Nang said: “Investors must accept the rule and face the risks if they still want big profits. If lucky and know when to stop, big profits are feasible. Any setback in selling property before the market freezes can close down your investment capital”.
