The HCM City Department of Natural Resources and the Environment is drafting a new land price framework, which, if approved, will be applied from August 1 until the end of the year.

According to Chau, the price levels are 10-20 times higher than those currently applied. Sharper price increases, by 30 times, have been reported for one inner district and four suburban districts. Land prices in some places in the suburban district of Hoc Mon increased by 51 times.

The highest land price in HCM City, VND810 million per sq m, has been set for land plots in three well-located areas in the city, including Dong Khoi, Le Loi and Nguyen Hue.

Chau commented that the price level is still lower than market price. There are very few transfer transaction in these areas, because real estate there is super expensive. Real estate owners prefer leasing their properties for profit instead of selling them.

There was only one transaction reported in the area, 15 years ago, and the reported price was VND2 billion per sq m.

Chau believes there is no need to adjust the 2020 land price framework because the land price adjustment coefficient in 2024 has been raised.

The land price adjustment coefficient for Nguyen Hue street, for example, has been raised to 3.5 (it was 2.5 previously). With the current land price calculation method (basic price x land price coefficient), the land price for Nguyen Hue street would be VND567 million per sq m (VND162 million per sq m x 3.5). The price is higher than the previously set level of VND405 million per sq m.

“There’s no need to adjust the land price framework at this moment, because HCM City has sufficient regulations on that. The 2020 price framework still can be used until the end of 2025,” Chau said.

Regarding the land valuation to calculate land use fees and land rent for real estate development projects, Chau believes this will not force real estate developers to pay more for land rents, because the land price framework is not applied to the projects. 

However, he said when the new land price framework is applied, the cost for site clearance will increase, because landlords tend to require higher compensation for their departure to make room for projects. 

Individuals and households will have to pay more for land use once land prices are adjusted, which leads to housing price and leasing fee increases.

Anh Phuong