Real estate investors should beware of rumors

The recent land prices rush in Vietnam is mainly caused by real estate wholesalers, who boast prices and make people believe that prices would continue to rise if they don’t make investment soon enough.

This leads real estate investors to purchase lands in order to try and cash in on the waves of upcoming infrastructure projects.

Real estate investors should beware of rumors

Real estate Kiosks appears everywhere in Quang Nam province and Da Nang city (Photo: SGGP)

There are a multitude of real estate websites that provide analysis and articles on the potentials of land plots after major infrastructure works are completed and put into use.

They however do not give specific details about the date and time projects are expected to be completed.

Many real estate middlemen even blatantly fake documents with the seal and signatures of functional agencies to trick buyers into thinking some projects are due in the near future.

The wholesalers’ cash cow

Many real estate experts based in Quy Nhon warned our journalists against rumors that real estate wholesalers are spreading in order to benefit themselves.

In early 2018, real estate business and authorities in Phu Yen province had their hands full as prices of coastal lands in Hoa Hiep Trung town, Tuy Hoa City and Tuy An District suddenly escalated. During this time, there was a group individuals scattering rumors to bait potential real estate investors.

In a coffee shop, Sai Gon Giai Phong reporters overheard a 37 years old wholesaler flaunting his techniques to an underling.

The man was bragging that he can boast the price of any piece of land, by sending out his stooges to roam around coffee stands in the area to spread fake news on land prices. They even pretend to make transactions to trick people into actually purchasing land.

The man said: “Just do this for a couple of years and you’ll make a ton. I managed to sell three lots just last month and got more than VND100 million (US$4,283)."

According to an unnamed government official and real estate middleman in Long An, he has earned tens of millions of dong each month thanks to the recently dynamic housing market.

He can talk investors into buying and reselling a single piece of land several times, boasting its price from VND1.2 billion to a whopping VND6 billion (US$51,393 - US$256,967).

An anonymous investor admitted that most of the time, they only knows vaguely of future infrastructure projects through the news, but not the how and when of the whole process.

 

They quote their prices when everyone else does, and suffers from the same mentality as they do. A confident investor named Lan said: “I only seek to buy projects at affordable prices, with transparent legal documents, where people are allowed to start constructions right away. I always ignore rumors and carefully refer to different sources and analyze the outcome by myself. Thanks to all that, I managed to make a profit of about 7 percent per month, which is not much but still my hard-earned money.”

The authority’s assessment

On the subject of Cat Lai Bridge and HCMC - Moc Bai Expressway mentioned in the previous article, these projects do exist, but there is a long way to go from blueprint to construction.

These projects are an essential for the public, but necessary procedures are painstakingly slow, having to wait for the Ministry of Transport to submit them to the Government for approval.

According to Mr. Le Hoang Chau - Chairman of HCMC Real Estate Association, in Nhon Trach district real estate has the potential for price boasting, if the Cat Lai bridge and Long Thanh airport projects are commenced.

However, investors need to carefully review the zoning plans for pieces they want to purchase, avoid purchasing what most people buy or hogging cheap land lots, as these are usually marketing ploys to trick them.

Many plots are labeled as lands for projects but are actually allotted agricultural and forestry land. In addition, real estate brokers sometimes impersonate project investors in order to scam buyers.

Mr. Tran Uc, Chairman of Dien Ban Town People's Committee, Quang Nam province affirmed that all projects in Dien Nam - Dien Ngoc are just at their beginning phase, and there are many procedures to be completed. He also warned people to stand their grounds against false news on governmental plans for these areas.

In the face of land price boasting, the Chairman of Da Nang City People's Committee has ordered the city Police Department, the Department of Construction, Department of Information and Communications, Department of Justice, and People's Committees of districts to closely manage real estate transfers in the area.

According to the Department of Construction of Long An, many housing projects are deployed, then advertised on websites without completing the legal procedures. There are projects that have not even been licensed but still see acres being sold.

The Department of Construction has advised Long An Province’s People's Committee to rectify real estate business activities that are not in accordance with local regulations, said Mr. Nguyen Minh Hung, deputy director of the agency.

Preventing real estate “bubbles”

According to the Prime Minister's Directive No. 11 / CT-TTg dated April 23, 2016, on solutions to encourage stable and straightforward development of the real estate market, the People's Committees of central level provinces shall promptly and strictly implement provisions related to the real estate market; to monitor and control information of market movements and implement timely measures to stabilize the market, preventing price boasting and real estate bubbles in the area. SGGP

 
 

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