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Vietnam Real Estate Market News

Vietnam Business » Vietnam Real Estate Market News » Ha Noi land-price bubble expands

Ha Noi land-price bubble expands

The State compensates land-owners displaced as a result of land revocation for real estate development. Controls such as this one are necessary to stop the real estate market spiralling out of control whenever the Government makes changes to its development planning.

Former Minister of Natural Resources and Environment Dang Hung Vo spoke to Nong thon Ngay nay (Countryside Today) newspaper about speculation in Ha Nois outlying district of Ba Vi.

Land prices in the outskirts of Ha Noi, especially to the west of the city, have skyrocketed over the last few months. What is your assessment of the situation?

My understanding is that urban planning associated with the expansion of Ha Noi, a process which saw surrounding areas incorporated into the citys geography, lies at the root of recent speculation. People make investment decisions around development planning as opportunities to profit are perceived to arise. Recently, investors have focused such activity to the west of Ha Noi, particularly Ba Vi, where agriculture is widespread and land prices remain low.

But the State still needs to re-assess compensation prices for land. While a higher compensation rate is needed to protect the interests of farmers.

So why are land prices being pushed up in Ha Noi ?

Speculators have aroused interest among investors looking to buy land in Ba Vi by spreading rumours about imminent land price rises. This information is incorrect and has played on peoples desire to make huge profits. Without conducting adequate research into the market for land in Ba Vi, many investors simply followed the crowd and bought in.

As a result, the land market in Ba Vi is now overheating.

Are you aware that speculators have earmarked the so called spiritual axis in Ba Vi to push land prices up?

Information about the spiritual axis is merely a notion of planning. According to these plans, a highway will link the capital city with Ba Vi, stretching all the way to the foot of Ba Vi Mountain.

Speculators have exploited this plan to spread rumours about what has and has not been earmarked on the axis to spark a buying spree and push land prices up in and around Ba Vi. This is a simple case of misinformation.

Should such acts of misinformation be punishable by law?

I think such acts are levied heavy punishment in developed market economies that have a strong rule of law. If fake information is detrimental to a group of people then I believe the perpetrator of that misinformation should be liable to be prosecuted.

Is it possible to fight land speculation by levying more taxes?

Most reasons put forward to prevent land speculation are not convincing, in my opinion. It is true that current tax rates remain too low to deter speculators but we have to find effective measures instead of drafting more tax laws if we want to fight speculation.

Land speculation is also widely accepted at reasonable levels as it stimulates transactions in the market.

Is the mass transfer of land in districts like Ba Vi happening because of poor management or ineffective State policies?

Existing policy regulates that land zoned for rice cultivation cannot be transferred to people who plan to use it for non-farming purposes. This is not the case with agricultural land but we still lack specific regulations on this issue.

One solution will be for the State to only allow the transfer of agricultural land between farmers, as with land reserved for rice cultivation.

The transfer of agricultural land to people who are not farmers will then only be permitted if they possess farm projects with approved licences. In this way speculators will be prevented from converting agricultural land.

Authorities at the commune, precinct and township levels should also oversee land use and report violations to higher competent agencies.

Who is responsible when land speculation and bubbles occur?

This is partly a problem of ineffective legal regulation.

Should the Government protect rice growing traditions and agricultural land use in Ha Noi or concentrate on industry and services instead?

I think Ha Noi should retain rice cultivation even after expansion. The capital city should also be enlarged to develop environmental protection, culture and food security as well.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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