Compiled by Mai Hương

As of early January 2025, approximately 25 provinces across Việt Nam have issued new land price frameworks, effective until the end of 2025. These adjustments are part of the reforms introduced under the Land Law 2024, which aims to enhance transparency and align land prices more closely with actual market values.

The updated land price frameworks allow provincial authorities to revise land prices periodically, enabling a gradual transition towards a market-oriented valuation system, expected to be fully implemented by 2026. This approach is intended to mitigate sudden price hikes that could disrupt the interests of both land users and investors.

Despite this, the dramatic price hikes in some localities have caught both residents and businesses off guard, stirring significant concern in the real estate sector.

In HCM City, for example, land prices have risen by up to 38 times, with some areas now valued at VNĐ687.2 million (US$27,055) per square metre. Hà Nội has also seen significant increases, ranging from two- to six-fold, with the highest price recorded at VNĐ695.3 million per square metre. These sharp adjustments have sparked concerns among real estate developers and investors about the potential for reduced affordability and investment attractiveness.

Chairman of the Vietnam Association of Construction Contractors (VACC),Nguyễn Quốc Hiệp, expressed concern about how these rising land prices could affect Việt Nam’s investment environment.

He pointed out that competitive land prices, coupled with affordable labour and efficient logistics, have traditionally been key factors in attracting foreign direct investment (FDI). With labour costs rising and now land prices escalating, Việt Nam’s competitiveness could be at risk, potentially deterring future investment.

Hiệp further highlighted the shortcomings in the current land valuation process, particularly for businesses involved in leasing or purchasing land for development. He warned that the new pricing could lead to fewer projects being initiated, ultimately affecting local government revenues and stifling economic growth.

He called on the Ministry of Natural Resources and Environment to provide clearer and more detailed guidelines to ensure a fair and balanced approach to land valuation that considers the interests of all stakeholders.

"There are cases where, within just one year, the land price in the same area and for the same plot increased by 40 per cent in just four months, outpacing inflation. This is unreasonable. The Ministry of Natural Resources and Environment needs to provide clearer guidance to local authorities on determining land prices, especially using the residual method," Hiệp said.

Pricing complexity

The complexity of land price determination has already begun to impact project implementation.

Tuta Group, a Bắc Giang-based real estate company, has reported challenges due to unclear regulations surrounding phased land allocations. This ambiguity has led to delays and uncertainties in project execution, as local authorities struggle with large price differences between allocation phases, making it harder to calculate land use fees.

Meanwhile, the Land Law 2024 defines commercial and service land for business and tourism facilities like hotels and resorts. The Deputy General Director of CEO Group, Vũ Lan Anh, pointed out that localities often charged high one-time land rental fees for this type of land, which would discourage investment in tourism projects.

To balance interests between the State and investors, she suggested setting commercial and service land prices at 20-40 per cent of residential land prices.

Director of the Legal Department at the Ministry of Construction, Nguyễn Mạnh Khởi, acknowledged these concerns, emphasising the importance of clear communication and a well-defined framework to support the market-based valuation approach.

He underscored the necessity of a skilled valuation advisory team and consistent application of valuation principles across provinces to ensure fairness and transparency in the real estate market.

Land valuation has long been a bottleneck in Việt Nam’s development projects, frequently surpassing the 60-day approval deadline and extending to one or two years.

Associate Professor Nguyễn Quang Tuyến of the Hanoi Law University noted that some projects had been delayed for years due to the protracted valuation process. He warned that if these inefficiencies weren't fixed, the real estate market's growth could slow down, affecting the broader economy.

Experts at a recent workshop on land valuation stressed the importance of balancing market conditions with the broader economic impact. They cautioned against using land price increases solely as a tool for boosting state revenue, as this could lead to speculative behaviour and volatility in the market. Instead, they advocated for a more measured approach that supports sustainable development and long-term stability.

The rising land prices have also sparked concern among local residents, particularly those in urban areas where the cost of living is already high. Many fear that the increased land prices will translate into higher housing costs, making it more difficult for average citizens to afford homes. This could exacerbate existing socio-economic disparities and pose challenges for urban planning and social cohesion.

The government faces a delicate balancing act in implementing these reforms. While the alignment of land prices with market values is essential for transparency and fairness, the potential for negative economic and social consequences cannot be overlooked.

Experts suggested that policymakers carefully consider the pace and scope of these changes to ensure they promote economic growth without compromising the stability of the real estate market or the broader economy. — VNS

MONRE recommends fixing delays in local land price decisions The Ministry of Natural Resources and Environment has recently instructed provincial authorities to improve land price management and prevent land waste. They are urged to follow the Prime Minister’s directive to review and adjust land prices in auction areas before setting starting prices for land use rights. Local authorities must also speed up the process of determining specific land prices for calculating land use and lease fees, especially for land allocated or leased before the Land Law 2024 came into effect. Reports are required by April 30, 2025, with plans to address any delays in land price decisions. Provinces are also asked to set rules on sales ratios, occupancy rates, and investor costs as per new regulations, ensuring that land prices follow the required procedures and principles. Local authorities are responsible for any delays in land pricing. — VNS