Land valuation in downtown Hanoi will rise by as much as 21 percent next year, reaching the highest rate allowed in the country, officials said.

Under a new proposal by the Hanoi People’s Committee, land in the city’s main commercial streets, such as Hang Ngang and Hang Dao in Hoan Kiem District, will have the highest value of VND81 million (US$4,300) per square meter in 2010.

The farther away from the downtown area, the lower the land valuation will be, the capital city administration has said.

Phi Thai Binh, deputy chairman of the People’s Committee, said land valuations would be adjusted closer to the real market value. Land value in some outlying districts will be lowered from a year ago, while it will go up in other parts of the city by up to 40 percent based on improved infrastructure facilities.

According to the Hanoi Department of Natural Resources and Environment, the market value of land in areas near the inner districts or with key traffic systems has surged 20 percent on average this year, and has even doubled in some places.

Land valuations set by local governments every year are mainly used for tax purposes. Property prices in real transactions are always higher than the official valuation.

Last week the government in Ho Chi Minh City said it would keep land valuations in most of the city unchanged next year as it wants to create stable conditions to attract investment.

Only 12 of 2,890 streets in the city will have their land valuations increased in 2010, the administration said, adding these are mostly near the East-West Highway project.

Dong Khoi, Nguyen Hue and Le Loi streets in the city center will remain at the top with the highest land valuation of VND81 million per square meter. Meanwhile, land in outlying Can Gio District will be valued at VND1.2 million per square meter, the lowest rate in the city.

This year land valuations have more than doubled from 2007. The increased values have led to higher land use taxes in Phu My Hung residential area in District 7, causing an ongoing dispute between the property developer and residents over who should pay the taxes.

If passed by the city legislature, the new annual land valuation system will take effect on January 1, 2010. The system will not be used to calculate land compensation for residents displaced by public projects. The real transfer value will be applied in such cases, city officials said.

Source: Thanh Nien