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Real estate bubble taking shape in Vietnam?
The land prices in some areas in Hanoi, especially in Ba Vi area, have been skyrocketing over the last month. Experts have warned about a ‘bubble’ which may do harm to the real estate market.
Experts have every reason to worry about the new ‘land price fever’ as land prices in some areas in Hanoi have increased by 35-40 percent, while the number of successful transactions has increased by 25-30 percent. Ba Vi area proves to be the ‘hottest’ area in Hanoi, when all people rush to purchase land in the area.
The new Thang Long highway will link the centre of Hanoi with Ba Vi, the new national administration centre. People are rushing to purchase land in Ba Vi area, thus making the land prices here increase by two or three fold within a short time. They hope that the land investment now will bring money later, when Ba Vi will become the new national administration centre.
In a recent interview given to press agencies in Hanoi, Deputy Minister of Construction Nguyen Tran Nam said that the shift of the national administration centre to Ba Vi area will take place over “the next 50 years” and that the changes in urban planning may still occur.
To date, the ups and downs of real estate prices in Vietnam have been dependant on rumours and unofficial information. That explains why even though the urban planning has not been approved, the land price in Ba Vi area has been increasing.
Analysts have warned that in this case, it may happen that some speculators, who purchased land in Ba Vi a long time ago, now spread the news about Ba Vi national administration centre to push the prices up which can help them get more money from the speculation deals.
The analysts said that the land market in Ba Vi has become so hot because of the investors, who make investment decision not by analyzing the situation, but by ‘following the crowd’. Right after hearing that Ba Vi may become the national administration centre, they have rushed to seek to purchase land here, believing that this is the best way to earn money.
But why do the investors make investment just based on rumour and how can speculators earn fat money from speculation deals? Analysts said that it is because people cannot get official information from government agencies.
“If we provided enough information to people, if we clearly said that this is just a possible project which has not been approved, I think that people would not rush to seek to purchase land in Ba Vi,” an expert said.
According to Dang Hung Vo, senior advisor to the Ministry of Natural Resources and the Environment, the Hanoi land market has become more bustling recently because many Hanoians have idle money and have decided to inject their money in real estate. Meanwhile, many speculators try to push the prices up. The real estate prices have been raised to levels that are higher than their actual value.
vietnamnet, SGTT
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