The Vietnamese real estate market is experiencing a decline in apartment and land prices, with a significant drop in land transactions. Some investors are listing properties at prices 20% to 30% below their purchase price but have been unable to find buyers for years, resulting in their investments being tied up for an extended period.
According to VnExpress on November 8, the local land market is facing a situation where even with price reductions, transactions are not occurring due to the exit of speculative funds and a lack of genuine demand. Investors are particularly struggling to sell land in suburban areas that lack population and amenities.
Apartment and Land Prices Decline, Transaction Volume Plummets
Since the second quarter of this year, Vietnam's real estate prices have shown signs of adjustment. A report from the Ministry of Construction, reported by VnExpress on September 2, indicated that the average resale price of apartments in Hanoi fell by 3.9% to approximately 12.3 million dong (about $655) per square meter compared to the previous quarter. In Ho Chi Minh City, prices dropped by 3.6% to about 10.8 million dong per square meter.
The average resale price of land nationwide also decreased by 2% to 3%. The average asking price fell by 2.5% to about 40 million dong per square meter, while in Ho Chi Minh City, it recorded a decrease of about 3% to 66 million dong. The decline in transaction volume is notable; the Ministry of Construction reported that nationwide real estate transactions exceeded 100,000 in the second quarter, but this represented a decrease of 28.5% from the previous quarter and a 36.3% drop from the same period last year. Specifically, land transactions fell by 32.6% to 73,438.
The Ministry attributed the price adjustments to high financing costs, worsening transaction liquidity, and a shift of investment funds toward properties intended for actual residence.
In the land market, cases of investors suffering losses while failing to find buyers are becoming more common. One investor, identified as A, purchased a 100-square-meter plot in the former Long An Province's Duc Hoa area for 13 billion dong in 2019, anticipating infrastructure development and urban upgrades. However, after attempting to sell since 2022, he has yet to finalize a transaction.
Initially, he aimed to sell at the purchase price but later decided to accept a loss of 3 billion dong. Yet, after nearly four years, he still has not recovered his investment. Another investor, B from Hanoi, faces a similar situation. He bought a 140-square-meter plot in the former District 9 of Ho Chi Minh City for 8.7 billion dong and listed it for 8 billion dong in 2024. After reducing the price to 7.7 billion dong, he still has not made a sale.
This trend of poor transactions is confirmed by third-quarter statistics. According to real estate consulting firm DKRA, in southern Vietnam, 99 projects offered 8,350 land lots, but only 116 were sold, resulting in an absorption rate of about 1%. A survey by the real estate platform Batdongsan also indicated that interest in land in the third quarter was only 9%, the lowest among all property types. The volume of land transactions reported by surveyed agencies decreased by 81% compared to the previous quarter.
“Investors Leaving, Genuine Demand Cannot Fill the Gap”
Experts have identified the exit of speculative funds and a lack of genuine demand as the primary causes of the land market's stagnation. Dinh Minh Tuan, head of Batdongsan's southern region, explained, “Investors, who previously accounted for 90% of land transaction demand, are leaving the market, but there are not enough genuine buyers to replace them.” He noted that as investment demand weakens, actual buyers alone cannot absorb the existing supply, leading to situations where even discounted land fails to attract buyers.
The difficulty of generating rental income from land compared to apartments or townhouses is also cited as a reason for the transaction slump. Land in areas lacking residential and commercial facilities does not yield income during the holding period, tying up investment capital for long durations. Bo Hong Tang from DKRA Group added, “Rising development costs, complex legal procedures, and increased infrastructure investment burdens are causing developers to carefully consider new projects.”
Local readers are increasingly emphasizing the importance of the actual utility value of real estate over expectations of price increases. One reader remarked, “Many buy land based on rumors of road construction or urban development, but it takes a long time for actual residential areas to form,” advocating for investments in projects with transparent legal processes and established infrastructure.
Another reader pointed out, “When investing in real estate, consider who will buy it if you need to sell quickly. Vacant land in the outskirts can tie up funds for years without generating income, while apartments in residential areas can provide rental income.”
A different reader added, “Real estate investment is not just about waiting for price increases; it’s essential to assess the actual value and utility of the asset. Apartments can be rented out, and townhouses can serve both residential and business purposes, but vacant land struggles to create value during the holding period.”
* This article has been translated by AI.
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