Vietnam’s real estate sector is facing growing uncertainty as land prices soar following the implementation of the 2024 Land Law. The law’s intention to bring transparency and align land valuations with market realities is now under scrutiny, as dramatic price increases in several regions have raised concerns about the broader impact on investors and developers.
As of January 2025, 25 provinces across Vietnam have adopted new land price frameworks, effective until the close of 2025. The updates allow provincial authorities to periodically revise land prices, advancing the country toward a fully market-oriented valuation system by 2026. While this shift aims to prevent sudden price surges, some areas have seen shocking hikes that have left local residents and businesses grappling with unforeseen financial challenges.
In Ho Chi Minh City, land values have spiked by up to 38 times, with prices now reaching VND 687.2 million (US$27,055) per square meter. Similarly, Hanoi has experienced price increases ranging from two to six times, with some areas now commanding up to VND 695.3 million per square meter. These sharp escalations have sparked concerns among real estate developers, who worry that the affordability of land may erode investment confidence and limit growth opportunities.
Nguyễn Quốc Hiệp, Chairman of the Vietnam Association of Construction Contractors (VACC), expressed anxiety over the potential fallout from these steep price hikes. He highlighted that competitive land prices, coupled with low labor costs and effective logistics, have historically been vital factors in attracting foreign direct investment (FDI). However, with both land and labor costs rising, Vietnam’s attractiveness to international investors may diminish, potentially threatening its economic prospects.
Hiệp also criticized the land valuation process, particularly in cases where businesses are seeking to lease or acquire land for development. The unpredictable pricing has raised concerns that fewer projects will be launched, which could result in lower local government revenues and hinder national economic growth. He urged the Ministry of Natural Resources and Environment (MONRE) to issue clearer guidelines to ensure fair and balanced land pricing that considers all stakeholders’ interests.
“There are instances where, within a single year, land prices for the same plot in the same area have increased by 40%, far outpacing inflation,” Hiệp remarked. “The Ministry must provide clearer instructions to local authorities to avoid such volatile shifts.”
The complexity surrounding land valuation is already taking a toll on project timelines. Tuta Group, a real estate company based in Bắc Giang, reported delays in project execution due to unclear regulations around phased land allocations. Local authorities, struggling with vast price disparities between different allocation stages, are finding it increasingly difficult to determine accurate land use fees, further complicating project planning.
The newly enacted 2024 Land Law also defines commercial and service land used for businesses and tourism projects, such as hotels and resorts. Vũ Lan Anh, Deputy General Director of CEO Group, noted that the high one-time land rental fees imposed on such properties may deter investment in the tourism sector. She suggested adjusting commercial and service land prices to 20-40% of residential land prices to strike a fairer balance between state interests and investor needs.
The Director of the Ministry of Construction’s Legal Department, Nguyễn Mạnh Khởi, acknowledged these challenges, underscoring the importance of clear communication and a robust valuation framework. He emphasized that a skilled team of valuation experts and consistent application of pricing principles across regions are essential for ensuring fairness and transparency in the real estate market.
Land valuation inefficiencies have long been a bottleneck in Vietnam’s development projects, often causing delays in approvals that extend beyond the legal 60-day deadline—sometimes stretching to one or even two years. Associate Professor Nguyễn Quang Tuyến of Hanoi Law University warned that such delays could stifle the growth of the real estate market and, by extension, the broader economy.
At a recent workshop on land valuation, experts stressed the importance of balancing the pressures of market demand with the economic realities of the country. They cautioned against using sharp price increases solely to boost government revenue, as this could spark speculation and market volatility. Instead, they advocated for a more measured approach that fosters sustainable development and long-term economic stability.
Rising land prices have also sparked concern among local residents, especially in urban centers where the cost of living is already high. Many fear that increased land values will translate into higher housing costs, potentially exacerbating social inequalities and complicating urban planning efforts. This concern highlights the need for careful consideration of both the economic and social impacts of the new pricing frameworks.
The government now faces the delicate task of balancing these reforms. While aligning land prices with market values is a crucial step towards transparency and fairness, the risks associated with rapid price hikes cannot be ignored. Experts recommend that policymakers consider the pace and scope of these changes carefully to ensure they promote economic growth without destabilizing the real estate market or causing broader economic strain.
In related developments, MONRE has instructed provincial authorities to expedite land price decisions and eliminate inefficiencies in the land price management process. Local governments are under pressure to meet new deadlines, including a report due by April 30, 2025, which will outline strategies to address delays in land price determination. These steps are part of a broader push to streamline the land valuation process, improve market stability, and support the long-term growth of the real estate sector.
As Vietnam continues to navigate these land price reforms, the balance between transparency, investment stability, and affordability remains a critical issue for the future of its real estate market.
Related Topics:
Foreigners’ Appetite for Homes in Spain Since the Pandemic
