How will the public investment impact real estate market?

The 112 kilometer long Ring Road 4 project in the Capital Region runs through Hanoi, Hung Yen, and Bac Ninh. The project begins at the Hanoi-Lao Cai highway interchange and concludes at the Noi Bai-Ha Long highway. The entire investment is more than 85,000 billion VND.

Accelerating Ring Road 4 Projects

The Ring Road 4 - Capital Region Hanoi building project is progressing well, thanks to the cooperation of the government and key ministries.

According to the Hanoi Statistics Office, by the end of April 2024, local authorities would be actively implementing the project, with land being given over for building to ensure the projected progress. This resolve is clear as building continues day and night, even major holidays like April 30 and May 1. Despite the scorching heat, several workers are continue building the Hanoi Ring Road 4 to keep the project on track.

The project has thus far received around 12,600 billion VND in investment, with an 8.9% building progress. According to the Hanoi Transport Construction Investment Project Management Board, 96.54% of the land has been authorized and recovered, leaving 27.35 hectares. The communities have also built 13 out of 13 resettlement zones.

The project is now deploying 32 construction fronts for Sub-project 2.1 of the parallel highways. The full parallel road is anticipated to be finished by 2025. Furthermore, the management board is working closely with associated units to start Sub-project 3, the highway project (PPP), in the fourth quarter of 2024, with the goal of finishing in 2026 and being operational in 2027.

The completion of Ring Road 4 in the Capital Region will help to alleviate traffic congestion, connect provinces, and create new development opportunities for the region, particularly Hanoi, Hung Yen, and Bac Ninh.

Preventing Price Inflation

Following the announcement of the Ring Road 4 deployment, the real estate market in the intended locations has grown active. Given the projects' favorable progress, real estate prices in Hoai Duc district locations like as An Khanh, Song Phuong, Duc Thuong, Duong Lieu, and Tien Yen have all risen in recent months, with some spots reaching tens of millions per square meter.

It is apparent that transportation infrastructure and planned regions have a significant impact on real estate. When there is strong transportation infrastructure, land prices tend to rise, and planned communities attract investors.

There was a bitter reality in which real estate values rose anytime public investment projects were involved. For example, between 2019 and 2022, land prices in localities like Vietnam Duc Thuong and Duong Lieu reached 130 - 150 million VND/m2, which was equivalent to certain places in big cities, but the facilities and value supplied to investors were not.

However, the situation of price inflation may be alleviated with the formal application of the Land Law 2024. The Land Law 2024 abolished the land pricing structure, allowing land prices to be determined solely on market principles. According to the Vietnam Real Estate Brokers Association (VARS), the removal of the land price framework, as well as the mandatory provision for bank payment in Article 48 of the new Real Estate Business Law, will eliminate the phenomenon of 'dual pricing', providing a foundation for the development of a transaction data system, promoting a more transparent real estate market, and reducing speculation and artificial surges.

Furthermore, several real estate professionals have stated that substantial conversations were place during the development of the Land Law on how to regulate and manage the land market in order to avoid incidents of land fever, such as those seen recently. One of the key initiatives enacted by the Land Law 2024 is the formation of a land price list that is consistent with market land values.