The new land price framework: Improving transparency and driving infrastructure development

Recently, Ho Chi Minh City announced its new land price framework under Decision No. 79/2024/QĐ-UBN, effective from 31 October 2024 to 31 December 2025. This marks the first adjustment since 2020, with significant increases ranging from 4 to 38 times depending on the area. The lowest price is 2.3 million VND per square metre in Thieng Lieng (Can Gio district), while the highest reaches 687.2 million VND per square metre along major streets in District 1, such as Dong Khoi, Le Loi, and Nguyen Hue.

This adjustment is expected to not only ensure fairness but also accelerate the progress of key infrastructure projects. Aligning land prices with market values helps minimise disputes in land clearance - one of the primary causes of delays in large-scale projects like Ring Road 3 and Metro Line 2.

The impact of the new land price framework on Ho Chi Minh City’s real estate market

The new land price framework impacts various stakeholders across the market, including residents, businesses, and foreign investors.

Residents affected by land acquisition now see their entitlements much better ensured than in the past, making them one of the main beneficiaries of the new framework. With prices aligned closer to market values, compensation becomes more transparent and equitable, reducing disputes over land clearance. This is particularly crucial for large infrastructure projects like the Ring Road 3 or Metro Line 2. According to Ms. Giang Do, Director of Advisory Services, Savills Viet Nam, the new land price framework not only fosters greater public consensus but also accelerates land clearance processes, a critical factor for major developments.

Additionally, the framework contributes to a more transparent investment environment, which is another advantage. Foreign investors can more easily estimate costs and calculate profitability, particularly as Ho Chi Minh City continues to solidify its position as a leading economic hub in the region. “By adjusting land prices to reflect actual market values, the new framework builds greater trust among foreign investors. This is a necessary step to ensure the sustainable development of the market,” shared the Director of Advisory.

Furthermore, to address the issue of applying uniform land prices across entire streets—despite varying characteristics such as one-way sections, two-way sections, wider or narrower roadways—it is essential to introduce more detailed land price segmentation. Prices should be categorised based on specific factors such as traffic flow, infrastructure connectivity, and surrounding amenities. This approach ensures fairness across different areas and enhances the practicality of implementing the new land price framework."

In suburban areas, the new pricing framework makes it more difficult to convert agricultural land into residential land, further limiting opportunities for developing affordable housing projects. This poses additional challenges for addressing the critical need for affordable housing in the city.

Technological solutions and transparency

To address challenges in implementing the land price framework, experts emphasise the critical role of modern technology and information transparency. Automated Valuation Models (AVM) and Geographic Information Systems (GIS) have proven effective in enhancing accuracy in land valuation, ensuring the framework better reflects market realities. These systems also help minimise subjective interference, fostering greater trust among residents and businesses.

In addition, establishing an online land price information portal is deemed essential. A transparent system that publicly provides land price data by area would allow residents, businesses, and investors to access information easily, thereby enabling them to make informed decisions. “Information transparency not only builds trust but also lays the foundation for more effective land management” Ms. Giang emphasised.

Furthermore, to address the issue of applying a uniform land price across entire streets despite the varying characteristics of different sections, such as one-way streets, two-way streets, wider or narrower roadways—there is a need for more detailed price segmentation. Land prices should be categorised based on specific factors such as traffic density, infrastructure connectivity, and surrounding amenities. This approach ensures fairness across regions and improves the feasibility of implementing the new land price framework.

The integration of modern technology with improvements in the application of land pricing mechanisms not only enhances transparency but also supports the creation of a sustainable real estate market that balances the interests of all stakeholders.