Developers carve up large land parcels to boost sales
With the market for large lots slowing down, property owners have begun subdividing their land into smaller blocks to attract more buyers and spur sales.
Many entrepreneurs have changed their strategy and are now investing more money in allocating smaller plots of land, instead of offering large plots for sale, to make land more affordable.
They are also allowing buyers to pay in installments as an added incentive. This kind of business is popular in Vientiane, sparking new demand in the property market.
Managing Director of RentsBuy Co., Ltd. Mr Houmphan Sayalath told Vientiane Times on Friday it was hard to sell land in large lots these days as it was an unattractive proposition for local residents.
Only major investors can afford to buy large lots to use for factories, for example, and many of these are now putting their money into Special and Specific Economic Zones where they don’t need to invest in infrastructure development.
The economic slowdown in Laos over the past four or five years has driven down demand in the land market, particularly for large lots, and the market is not developing as anticipated. The sluggishness of the market has been noticeable since the government encountered budgetary tensions over the past five years.
The slowdown may also be linked to the country’s lower economic growth, which was recorded at 7.02 percent this year. In 2013, the economy grew by 8.3 percent.
Mr Houmphan observed that ‘land for sale’ signs can be erected for a year or more but most landowners are still unable to find buyers.
The land market in prime locations in the city centre is also saturated since the authorities built roads in different parts of the capital. Many more people and businesses have moved to the suburbs, which are not far from the city centre.
There is even greater demand for cheaper, smaller land plots as more people move to the capital.
One resident from Donenoun village in Xaythany district said she bought a 20m x 20m plot in the Tha-ngone area at a cost of 40 million kip.
She knew it was some way from the city centre but said she had no choice as she couldn’t afford to buy land any closer in.
The price of land offered for sale is still high in the city centre, which discourages people from purchasing it for business purposes. For instance, one plot on Samsenthai Road is up for sale at the optimistic price of US$4,000 (about 32 million kip) per square metre.
Of course, some people buy land in the suburbs in the hope that they will make a fat profit later on.
But those who offer land for sale without allocation of plots, road access or allowing payment in installments may struggle to make a sale because these days few people are interested in buying it.