On December 10, 2021, the real estate market was shaken before the auction of Thu Thiem land (HCMC) when Viet Star Real Estate Investment Co., Ltd (belongs to Tan Hoang Minh Group) paid up to VND 24,500 billion. won the price of land plot 3-12 Functional area No. 3, with an area of 10,060m2 (equivalent to 2.45 billion VND/m2).
Price steps 400-500 billion Vietnam Dong
Unlike the previous auction of land plots 3-9 with a small price step of 8-10 billion dong and 140 bids, the units participating in the last session showed strong hands with price steps up to hundreds of billion dong. Many large domestic and foreign investors stopped immediately after the final price of 8,800 billion VND. The race quickly became only a competition between the 12th participant, Viet Star Company, and the 13th participant, Capital One Financial JSC. Mr. Dung continuously offered huge price steps from 400-500 billion dong when the opponent only had price steps from about 100-200 billion dong.
In the 69th bid, Capital One Financial offered the final price of 23,800 billion Vietnam Dong. Chairman of Tan Hoang Minh Group ended the race quickly with the price of 700 billion VND at the 70th bid. Compared to the land lot 3-8 with an area of 8,500 m2, purchased for 4,000 billion VND in the previous session, this land lot 3-12 with an area of 10,000 m2 has a price 6 times higher.
Mr. Le Hoa Binh, Vice Chairman of Ho Chi Minh City People's Committee affirmed that this result shows the desire from investors for the rare central land of the city. "Before the organization, the city has prepared the strictest plans to ensure the publicity, transparency, and security of the auction process. These land lots are also the most special products in HCMC.
Hidden numbers of the utopian auction
Following the auction results of 4 land lots, Mr. David Jackson - General Director of Colliers Vietnam - although quite surprised at the final price. He affirmed that the location factor plays a decisive role in determining the property value. According to him, these lands put up for auction have a particularly favorable location, making real estate businesses want to acquire them. The interest and participation in auctions of many businesses also reflect the attractiveness of real estate in the central area, especially in the context of land banks in areas with good locations and development potential.
"Land cost is one of the most important components to determine the selling price of each product. Along with that is the land use coefficient, the larger the coefficient, the more products the investor can develop. After multiplying by the coefficient to calculate GFA, the investor can only sell up to 75-80% of the GFA area." Based on the detailed planning project of 1/500 scale, the land lot 3-12 has a total construction floor area (GFA) of 90,000 m2, the land use coefficient is 8.95 times and the number of apartments is expected to be 570 units. With that formula, when plots 3-12 are purchased for VND 24,500 billion, the price of each apartment is about VND 42.9 billion, equivalent to about VND 363 million/m2 with a construction rate of 75% GFA. This is the price excluding construction costs and business profits. "Whether the auction winner can sell real estate products at such a high price as well as how to position the product is really a mystery to the market," said the owner of a real estate business. He added: "This is a much higher price than existing projects in the current Thu Thiem area, even in more beautiful land lots."
Source: Zingnews