With bank lending interest rates and land prices plummeting, more and more people are borrowing money to buy land in rural areas to build homestay and farmstay facilities.
Nguyen Quang Hieu of Hanoi’s Dong Da District withdrew his bank deposit of VND5 billion (US$208,000) after deposit interest rates fell sharply, and borrowed VND600 million at an interest rate of 7% and bought nearly a hectare of farmland in Thuy An Commune in Ba Vi District for VND6 billion.
He says: “Farmland prices on the outskirts of Hanoi have dropped sharply, deposit interest rates are very low, and loan interest rates are not high; so why not borrow a few hundred million dong to buy land to enjoy during retirement?”
When he has enough money next year, he plans to dig a fish pond and build a garden house to live there. It is only 50-60 km from the city center, making it easy for his children to come there during weekends.
Phong, owner of a real estate brokerage in Ba Vi District, said since October he has been busy taking customers from urban Hanoi to see farmlands.
“Most of them want to buy for their own use because they like the open space for relaxation.”
Since the beginning of November many people have bought lands, mostly medium-sized with a pond and open views, and costing VND2-5 billion.
Farmland prices in Ba Vi are down 15-20% this year and 40-50% from their peaks at the end of 2021.
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| A homestay in Hoa Binh Province bordering Hanoi. Photo by VnExpress/Le Quan |
However, Nguyen Van Dinh, president of the Vietnam Association of Realtors, advised against using financial leverage to invest in farmlands because the homestay market has slowed down after a period of hot growth.
If they buy farmlands or forests, they need to invest at least 70% of their own money and have a clear loan repayment plan for less than two years, he suggested.
Dinh Trong Thinh, a lecturer at the Vietnam Academy of Finance, too said if people buy land for living rather than developing a homestay or farmstay, they should not borrow more than 20% of the deal value.