The Land Law has a profound impact on millions of people and hundreds of billions of dollars in investment. In a draft amendment to the Land Law, the Ministry of Agriculture and Environment has proposed revising Article 158 on the principles, basis, and methods of land valuation. 

Notably, the draft removes the principle of market-based land pricing. Instead, the state, as the representative of land owner, needs to exercise the right to control and decide on land prices. In the primary market (land allocation, lease, change of land use purpose, recognition of land use rights), land prices are decided by the State, regardless of the results of consultation.

Pham Viet Thuan, Director of the HCM City Institute of Resource and Environmental Economics, believes that the state’s decision on land prices in the primary market is consistent with the socialist-oriented market economy and is an inevitable trend. Transparent primary land pricing will help stabilize the market and limit abnormal price fluctuations.

According to Thuan, with clear primary prices, it would be very easy to determine secondary prices by using adjustment coefficients. This stabilizes the real estate market operation, prevents sudden price spikes, and eliminates mechanisms causing price instability.

Nguyen Quynh Trang from Savills Hanoi commented that the State’s decision on land prices instead of completely following market principles is a major adjustment. However, the effectiveness of the policy will depend largely on the implementation and accompanying data. 

“Without a comprehensive, updated data system or if prices deviate from actual transactions, land prices may fail to reflect true land use value. This could affect budget planning, create challenges for investors, or lead to inconsistencies across localities, especially without a national land valuation database,” she said.

However, while the State's land determining can create a clearer price framework for land acquisition, financial liability calculation and speculation control, the presence of independent valuation organizations and actual reference data is indispensable.

The draft law separates the roles of valuation consultancy organizations, appraisal councils, and provincial People’s Committees, or the entities issuing price decisions. According to Trang, institutionally, this is a step forward in reducing conflicts of interest and fostering objective assessments.

However, this will only be effective if appraisal councils have sufficient expertise and valuation consultancy maintains independence.

Currently, appraisal councils mainly consist of representatives from local departments, and not all members have deep expertise or practical experience in real estate valuation, which may limit the council’s technical capabilities.

She suggested enhancing the capacity of consultancy organizations and expanding the inclusion of independent experts in appraisal councils. Making the valuation process, data and criteria transparent is also crucial to building market confidence.

Land price lists

Some businesses expressed concern that abandoning the market-based valuation principle could make it difficult for investors to predict land use costs, which is a key factor influencing financial planning and risk management.

Savills recommended that strengthening the state’s management role does not necessarily mean entirely eliminating market factors. Instead, a flexible price framework should be developed, allowing market references in areas with robust data while maintaining stability in regions with incomplete data infrastructure.

“Maintaining market reference factors serves as a ‘guiding anchor,’ enhancing predictability and attracting investment,” Trang said.

Regarding the proposal to create detailed land price for every land plot in areas with digital cadastral maps, she believes this is a highly regarded reform, contributing to transparent valuation, reducing processing times for land allocation, leasing, acquisition, and compensation procedures.

However, Trang emphasized that implementing price lists for individual plots is not simple due to the incomplete national land database.

For land price lists to reflect actual values, multiple data layers (including cadastral maps, transaction histories, planning, infrastructure, and environmental conditions) must be integrated into a standardized system with regular updates and quality control mechanisms.

She proposed that cities with developed digital infrastructure, such as Hanoi, HCMC, and Da Nang, could pioneer this approach, gradually expanding to other provinces as conditions allow.

Hong Khanh