Land in Ho Chi Minh City and neighboring provinces has dropped 10-25% since January as indebted investors continue liquidating their properties.
According to real estate consultancy DKRA Vietnam, HCMC and it’s environs have seen only 16 successful transactions this year.
The market’s low liquidity has been a problem since mid-2022 according to DKRA, which also reported that the market has showed no signs of recovery in the short term.
Ta Trung Kien, CEO of real estate investment company Wowhome, said the key reason for the decrease in land prices is that financially burdened landowners see that the property market’s struggle could become much more prolonged.
Many who have gone into to debt to buy land are now wanting to recovery money, so they’ve turned to making smaller or no profit, or even losses just to get out of property and into other investment channels, said Kien.
Vo Hong Thang, R&D deputy director at DKRA Vietnam, said it is unlikely that the land market’s liquidity will go up in the short term because interest rates remain high, legal problems faced by many real estate projects persist, and capital flows have dried up.
Many investors have used financial leverage or enjoyed preferential interest rates, and grace periods for loans borrowed in the 2018-2022 period offered by property developers.
As well, Vietnamese property investors and developers are also facing a major credit crunch amid increasing interest rates. Local lenders are offering annual deposits interest rates of 8-9%. Many banks charge on average 3-4 percentage points more on loans than they pay out on deposits. So land owners indebted to loans now want to flee, sometimes at any cost.
According to Kien’s statistics, the number of investors selling land at a profit accounted for 30%, while those selling at break-even prices made up 30%, and those suffering a losses represented 40%.
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