Fallow projects amidst land plot fever

Dozens of urban areas are left abandoned across Hanoi

Not only in southern locations and the Vietnam’s up-and-coming special administrative-economic zones, the land plot fever is spreading across the whole country, including Hanoi and neighbouring provinces.

According to the latest report published by the Hanoi Association of Property Brokers, the price of land plots across the capitol has inched up by an average 10 per cent in recent months.

A square metre currently fetches VND180-200 million ($8,000-8,800) in Cau Giay district, and averages VND120-150 million ($5,300-$6,600) in Tu Liem and Tay Ho districts.

In the districts of Hadong, Hoang Mai, and Thanh Tri, the average price ranges from VND25-50 million ($1,100-$2,200) per sq.m.

Many land plot projects in Thanh Tri, South Tu Liem, Hoang Mai or Tay Ho districts which were put on sale early this year, have increased in price by tens to hundreds of thousands US dollars.

At the Thanh Ha real estate project in Hanoi’s Hadong district, a land plot was originally offered at VND15-18 million ($660-$800) per sq.m last year, but now the price has reached VND24-30 million ($1,060-$1,330), even touching VND45 million ($2,000) per sq.m at good locations.

However, even as the land plot fever is catching on, deserted land plots and villa projects are dotting Hanoi, with the suburban Me Linh district serving as a prime case.

According to statistics from the Hanoi Department of Construction, Me Linh district is now home to about 50 real estate projects covering about 2,000ha of space, mainly concentrated in the communes along Vo Van Kiet Avenue.

These include about 20 projects of large scale, going from several dozens to hundreds of hectares, largely in Tien Phong commune.

Many of these projects, albeit having kicked off construction more than a decade ago, have yet to be completed. Several projects have essentially been completed, but are still almost completely deserted as residents are few and far between.

A similar scenario can be seen at Van Quan urban area developed by Housing and Urban Development Corporation Limited (HUD) in Hadong district or Cau Buou urban area developed by a subsidiary of Hanoi Housing Investment and Development Corporation in Thanh Tri district, and several other urban areas like An Khanh and Thien Duong Bao Son in Hoai Duc district.

Nguyen Van Thanh, a housing broker in Hadong district, told VIR that attached land and villa projects have seen increased transactions in recent months.

The slow pace of construction or deserted land plots are due to a combination of factors, including low developer capacity or asset hoarding by consumers.

Nguyen Bich Trang, director of foreign-backed real estate advisory firm CBRE Hanoi, opined that experienced developers and investors are rare in Vietnam, leading to errors in project launching times.

According to Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, buyers in the land plot segment are mostly speculative investors, which leaves many projects deserted.

“Thereby, buyers with real demand should wait for prices to stabilise and ensure the project’s legitimacy before making a payment,” Chau said.