Brian Jeffrey
Surging Interest in Land Auctions in Hanoi’s Suburbs
In stark contrast to last year’s sluggish auction activity, an auction on August 28 in Thanh Cao commune, located in the Thanh Oai suburban district, revived excitement as 4,000 applications were received with 1,600 individuals participating.
Starting prices ranged from VND8.6 to 12.5 million per square meter, yet the winning prices soared past VND100 million per square meter.
Another notable auction occurred in the Long Khuc area of Tien Yen commune on August 19, where the highest bid reached VND133.3 million per square meter, an astonishing 18 times increase from the starting price of VND7.3 million.
A senior official from Hanoi’s Department of Natural Resources and the Environment noted a continued rise in bidding prices following the Thanh Oai and Hoai Duc auctions, labeling the spikes as “abnormally high.” Concurrently, other auctions in suburban areas also witnessed prices exceeding VND50 million per square meter.
Record Highs and Participant Decline
Recent land auctions in Phuc Tho district established new records, with winning prices increasing from VND60 million per square meter in the first auction to VND75 million per square meter by the third.
Despite these escalating prices, the turnout of bidders has decreased in comparison to previous auctions within other districts. For instance, on August 29, there were 39 plots available, but only 650 applications from 350 investors.
Subsequent auctions on September 10 and September 16 recorded lower participation with only 180 and 75 investors, respectively.
High Stakes and Withdrawn Offers
After the August 10 auction of 68 plots in Thanh Cao commune, significant public attention arose due to the unexpectedly high winning prices. Reports indicated that around 80% of the winning bidders chose to forfeit their deposits.
Investors who secured land plots priced between VND80 to 100.5 million per square meter failed to complete their payments.
A new auction in Bach Da hamlet on September 18 saw a decline in winning prices, with the top bid at VND48.9 million per square meter, breaking a streak of auctions where prices exceeded VND50 million.
Market Dynamics and Speculation
Commenting on the high withdrawal rate in Thanh Oai, Pham Duc Toan, the CEO of EZ Property, expressed that this behavior reflected speculator activity rather than genuine demand for housing.
Inspections by relevant authorities following these land auctions showed little fluctuation in winning prices. High starting bids required bidders to make deposits ranging from VND400 million to VND1 billion, which analysts believe helps curb speculation.
Toan recommended that prospective buyers evaluate land prices based on local development potential, interest from buyers, and market trends to avoid engaging in artificially inflated pricing gaps created by speculation.
Consequences of Speculation
Economist Dinh Trong Thinh highlighted the adverse effects of high bidding practices which lead to abandoned deals. This phenomenon contributes to an “artificial land fever,” causing inflation in market prices and market disarray.
Due to speculative practices, genuine homebuyers struggle, leaving only a minority of investors reaping benefits, underscoring the necessity for caution in land purchases.
Moreover, the consequences extend to a decline in state revenue, with the Thanh Oai district collecting VND80 billion from the August 10 auction, representing only 20% of anticipated earnings.
