Inadequacies in land valuation
Speaking with Lao Dong, Mr. Nguyen Quoc Hiep - Chairman of the Vietnam Association of Construction Contractors - said that currently, the implementation of new regulations, especially Decree 71 on land valuation guidance, has revealed many shortcomings, causing difficulties for both businesses and local authorities.
Decree 71 stipulates that provinces must complete land valuation within 60 days from the date of the land allocation decision. However, many projects have been stalled and "shelved" for up to two years without yet completing the valuation.
"We have cases where although local leaders are very kind and supportive, many projects have been stalled for 1-2 months without land valuation. The main reason is that Decree 71's instructions are not clear, causing local authorities to be confused and afraid of making mistakes," said Mr. Hiep.
Ms. Do Giang - Director of Savills Vietnam Consulting and Valuation Department - commented that Decree 71/2024/ND-CP has specifically stipulated the order and content of determining land prices according to 4 methods including comparison, income, surplus and deduction. However, in reality, land valuation is still facing many difficulties due to many barriers in information collection and the market not having transparency in transaction data.
According to Article 257 of the 2024 Land Law, in some localities, the land price list issued by the People's Committee under the 2013 Land Law will continue to be applied until December 31, 2025.
However, because this land price list no longer accurately reflects market value, many localities are currently in a state of waiting to apply the new land price list according to the provisions of the 2024 Land Law - which is expected to be adjusted to get closer to market price, serving the consideration and approval of projects.
In addition, valuation methods also face many obstacles when applied. All four current methods are facing difficulties due to limitations in transaction data. The real estate market has so far lacked transparency, especially in the disclosure of transaction information, leading to difficulties in data collection. This affects the ability to find suitable comparative assets in the comparison method, as well as the accuracy of input data for the surplus method, income method or deduction method.
"Recently, many public land auctions have recorded the phenomenon of pushing prices up, causing market fluctuations. This makes the collection of valuation information even more complicated," Ms. Giang shared.
Proposed solutions
Ms. Do Giang - Director of Savills Vietnam Consulting and Valuation Department - said that recently, the sudden increase in real estate prices in a locality can strongly affect land valuation in neighboring projects in many ways. Transactions during the "land fever" period often do not reflect real value, but are dominated by speculative factors or market psychology. If these transactions are used as a basis for valuation, the risk of correct valuation is very high.
To overcome this situation, the market needs to focus on perfecting data and improving the transparency of real estate information.
First of all, it is necessary to build a synchronous, transparent and accurate land price data system and real estate transactions. Real estate transactions need to be updated regularly and publicized, creating a reliable source of information for investors and appraisal units.
Management agencies can collect data from many sources such as notarized contracts, tax declarations, and actual transactions to ensure that land value is properly reflected. This data must then be "cleaned" through an unusual trading control mechanism, eliminating transactions with sudden increases in value, speculative factors or between related parties.
Ms. Do Giang shared that transparency of planning information and land use plans is also very important. When the information is clearly disclosed, the market will avoid "land fever" caused by rumors or profiteering from information technology groups before the official plan is announced.
If implemented synchronously, these solutions can accurately reflect the real value of land prices, limit the negative impact of market psychology, and create a foundation for sustainable development for the real estate market.
