The restructuring of provincial-level administrative units and the removal of district-level units are being directed by the Politburo, the Secretariat, and the Government of Vietnam to streamline the administrative apparatus and improve the efficiency of state management. This is not only an administrative decision but one that directly affects various sectors of the economy, including real estate.

The policy of provincial mergers and district-level abolition is a major strategic direction of the Vietnamese Communist Party and Government, outlined in Conclusion 126-KL/TW dated February 14, 2025, by the Politburo and the Secretariat. The primary objective is to streamline the organizational structure of the political system, reduce overlapping units, and enhance operational efficiency and effectiveness.

In terms of real estate, provincial mergers may create new economic centers, attract investment, and promote socio-economic development. When urban planning is aligned with infrastructure development, it can significantly improve residents' quality of life.
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Significant Impacts on the Real Estate Market

According to real estate investors, the policy of provincial mergers could have substantial impacts on the market, potentially driving up land and housing prices. However, the actual effects will depend on several factors, including urban planning, infrastructure investment, and the broader economic context.

One key impact of provincial mergers is the shift in administrative centers. When a locality is selected as the new provincial capital, land prices in that area often surge due to the influx of capital for infrastructure, administrative, and commercial development.

Past merger cases have shown that land prices in areas becoming new administrative centers often increase by 30–50% in a short period. In particular, plots near government offices, commercial hubs, and transportation infrastructure are the most sought-after.

In 2008, before Ha Tay Province was merged into Hanoi, land prices in Ha Dong Town ranged between VND 12–15 million/m². After the merger, prices rose sharply due to investor expectations, especially when the extended Le Van Luong Road and the Cat Linh–Ha Dong metro line received major infrastructure investments. Similarly, when Thu Duc City was established in 2021, land prices in Truong Tho Ward rose from VND 40–50 million/m² to VND 80–100 million/m², thanks to the Thu Thiem 2 Bridge and creative urban planning.

Whether property prices in merged provinces increase significantly depends on the level of integration. For instance, if a small province is developed as a satellite area of a larger province with synchronized transportation and infrastructure systems, and strong economic linkages, land values are likely to surge.

Conversely, if the merger is merely administrative without necessary investment, the “spillover” effect will not lead to sustainable development. Real estate value is heavily dependent on actual amenities and long-term development potential.
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Risks Beneath the Surface

Alongside opportunities, provincial mergers also entail challenges and risks. Specifically, such policies may trigger a wave of land purchases driven by speculative expectations of soaring real estate prices. This sentiment is a double-edged sword, often leading to "virtual land fever," where prices are pushed far beyond intrinsic value.

For example, when rumors circulated about Phu Quoc being upgraded to a city under Kien Giang Province, land prices skyrocketed. Some areas saw prices rise from VND 10–20 million/m² to VND 50–60 million/m² within a few months. When the city upgrade process stalled, prices plummeted, leaving many investors stuck.

Such localized land price booms pose serious risks for buyers and investors. If price hikes are driven by speculation and herd mentality rather than sustainable fundamentals, the market can quickly become unstable. Once the hype fades, those who bought at peak prices may struggle to exit, leading to financial loss.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), noted that the real estate market is expected to show clearer signs of recovery from mid-2024, depending on factors such as economic stability, government support policies, and real market demand.
“Provincial mergers could serve as a growth engine for the real estate market, but synchronized infrastructure development is essential. Without appropriate infrastructure, the mergers are unlikely to deliver the desired impact,” Mr. Dinh emphasized.

Agreeing with this view, at a recent conference, Dr. Tran Du Lich – an economic expert – stressed that administrative restructuring must be linked to an economic development strategy. Otherwise, it will only create short-term fluctuations, especially in the real estate market.

Opportunities always come with risks. When Ha Tay merged into Hanoi, not every area flourished like Ha Dong. For instance, Chuong My District only saw modest growth before stagnating due to lack of investment. If resources are concentrated only in the larger province, remote districts may be neglected, increasing regional disparities.

Provincial mergers are a complex process, and the real estate market is inherently volatile. Therefore, citizens and investors must closely monitor planning information, carefully assess the development potential of areas, and avoid speculation based on rumors. With informed decisions and thorough analysis, it is possible to seize opportunities and mitigate risks during this transitional phase.