Land prices in many areas have surged dramatically 'just because of' news related to mergers.

The asking prices for land in many areas have increased by 30-50% within just a few weeks following news of the provincial merger, but experts warn of the risk of a "speculative bubble".

At the real estate market report event for Q1 organized by the Batdongsan specialized site on the morning of April 11, Mr. Dinh Minh Tuan, Director of Batdongsan in the Southern region, stated that in March alone, following the surge of information regarding the merger of provinces and cities, land prices and search volumes nationwide experienced significant fluctuations, increasing by an average of 20-67% compared to the same period last year.

Along with the price increase, the demand for purchasing land lots in March also rose by an average of 50% compared to February. In Hanoi, the search volume increased by 52%, in Ho Chi Minh City by 31%, and other provinces saw increases ranging from 54-140% compared to February. The land lot segment was also assessed by brokerage firms as the strongest growth area in terms of transactions in Q1. More than 44% of brokerage firms reported that transactions increased by around 10%, while 24% indicated transaction increases of 10-50%.

Real estate in the eastern area of Ho Chi Minh City with land lot and townhouse projects, February 2025. Photo: Quynh Tran.

Similarly, a report from the Vietnam Real Estate Brokerage Association (Vars) also shows that in March, just a few weeks after news of the proposed provincial mergers, land prices in some localities were pushed up significantly, with some areas increasing by 20-30%. However, in reality, the recorded transaction volume only grew in those provinces predicted to be merger centers, where real estate prices had not yet reached excessively high levels.

According to DKRA Group, in Q1, there was a phenomenon of localized price increases for land lots in several provinces and cities, such as Nhon Trach (Dong Nai) increasing by 30-50%, and Phu My and Chau Duc (Ba Ria - Vung Tau) rising by 20-30%, while most provinces in the South only saw average increases of 6-8%. This localized increase was driven by information regarding provincial mergers.

Mr. Dinh Minh Tuan, Director of the Southern region at Batdongsan, mentioned that the aforementioned price increases were noted in the volume of listings, specifically the expected increases from sellers, and did not fully reflect the actual transaction prices. The trend saw stronger growth in Northern provinces, while it remained 'modest' in Southern provinces. With news of the provincial mergers, Northern investors have also shown greater interest in areas across the country.

According to aggregated data from Google in February, the Northern region and Hanoi recorded the highest search volumes for the keyword 'provincial merger,' with other provinces such as Vinh Phuc, Ninh Binh, Thai Binh, Bac Ninh, and Binh Duong following.

Regarding the 'hot' price increases of land lots, experts believe that this upward trend is not sustainable and carries many risks. Dr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokerage Association, commented that the trend of land price increases following fluctuations in planning is not new to the Vietnamese real estate market. History shows that whenever new planning information emerges, land prices in the related areas often surge sharply in the short term. The primary reason stems from investors' FOMO (fear of missing out) mentality.

According to Mr. Dinh, the merger of provinces and cities will have a positive impact on the real estate market, potentially helping to reduce some legal procedures for implementing projects, thereby adding supply to the market, especially in the affordable housing segment. Citizens will have more options to buy homes at more reasonable prices.

However, for real estate values to sustainably increase, they must be based on solid foundations, meaning that there must be synchronized development of transportation infrastructure and socio-economic growth. If the price increase is solely based on speculative information about infrastructure and planning, there is a high risk of capital being trapped and losses occurring.

Echoing this sentiment, Mr. Dinh Minh Tuan believes that three factors determine the sustainable increase in real estate prices in a locality: public investment, the local economic foundation, and migration rates. If the price increase is based solely on rumors of a merger into a locality or urban area within a short period, there is a high likelihood of it being a speculative increase. Investing based solely on rumor waves carries significant risk, particularly for new market entrants or those using financial leverage.

In light of the potential for a speculative bubble due to the news of provincial mergers, real estate expert Le Quoc Kien advises caution and warns against following the crowd mentality. Mergers can easily create a speculative wave, driving land prices up according to trends and psychological 'games' rather than real demand. If the planning is delayed or official information is slow to be released, the market could experience a 'bubble burst.'

According to Mr. Kien, real estate prices depend on future expectations, including roads, infrastructure, exploitability, local economic conditions, employment situations, and the ability to attract residents. All these factors contribute to the actual growth value of real estate. A potential market can continue to grow well, regardless of geographic changes, and vice versa.

Experts note that investors should be cautious and focus on long-term strategies, limiting speculative activities based on price increase information unless they are professionals with sufficiently strong capital.

Phuong Uyen