In 2011, the Vietnamese real estate market was lacklustre because it lacked investments. Most investors had to reduce selling prices but, to a certain extent, prices of downtown properties still inched up.
Downtown land rises silently
According to senior land brokers in Hanoi, land around Hoan Kiem Lake has the highest prices: VND900 million per square metre on Hang Dao Street, VND750 - 800 million per square metre on Hang Bo Street, VND620 million per square metre on Hang Chieu Street, VND600 million per square metre on Bat Dan Street, and VND500 million per square metre on Hang Bong Street.
In less central locations like Ba Dinh district, housing prices are lower but still very high. Streetfront houses on Dien Bien Phu Street are sold at VND300 - 400 million per square metre, and VND350 - 400 million per square metre on Cua Bac Street. Due to high prices, housing deals in such locations are limited. High prices are also the reason for silent price hike in this segment.
Tran Thien Tan, President of Song Phat Real Estate Company, said when land price in suburban districts rising some tens of millions of Vietnamese dong it is called a “fever,” but an increase of hundreds of millions of Vietnamese dong in the downtown is not called a fever because the premium location is naturally understood to require high prices.
Besides, according to Mr Thien, buyers of downtown houses are usually super-rich people or overseas Vietnamese. They usually buy for subleasing rather than residence there, he added
Although the real estate market is generally considered inactive or even frozen, leading to a sharp drop of most housing projects, downtown land prices are still on the uptrend.
Prospects for higher residential land prices
Prof Dang Hung Vo, a land specialist, said land prices in downtown districts are always very high because owners can either stay or easily rent them. Land plots facing main streets always generate high profits and keep high values, thus they are usually the top picks of top property investors, he said.
Deputy Minister of Natural Resources and Environment Nguyen Manh Hien said that according to Governmental policies, property prices are decided by the market. It is important is how to figure out right price rates, which will be the job of the Ministry of Finance. However, we need to think twice about applying a common rate across a market segment. Is it reasonable for a square metre of land in the downtown of Hanoi to cost VND1 billion (US$50,000)? I think the most important factor of market-driven prices is successful market transactions. Nonetheless, most property transactions are not public and transparent.
Dr Alan Phan, President of Viasa Investment Fund, said in addition to downtown land, it is likely that prices of many property segments will rise and have good liquidity.
High-value houses, of VND4-5 billion each, are facing illiquidity because not many people can afford them. Residential plots with clear titles priced at less than VND3 billion will be hunted by many buyers. Therefore, price rises are expected on residential land, said Mr Alan Phan.
Sharing this standpoint, Mr Nguyen Huu Cuong, Chairman of Hanoi Real Estate Club, said that compared to depositing money at banks for an annual interest rate of 14 percent, investments in residential land will surely bring bigger margins of return in the long run.
Vietnamese
