Should You Cash in Gold to Invest in Suburban Land?

Transferring investment from gold to suburban land requires careful calculation of risks, expected returns, and the liquidity of each channel, according to experts.

Two years ago, I bought 35 taels of gold at 65 million VND per tael and have held onto it until now. Earlier this year, I sold 15 taels at 78 million VND per tael. Recently, gold prices have continued to reach new highs, so I plan to wait until the price reaches 90 million VND per tael to sell the rest and invest in real estate.

I notice that land prices in Ho Chi Minh City are showing signs of stagnation, and I want to use the proceeds from selling the gold to invest in suburban land, priced around 2-3 billion VND.

I seek expert advice on whether I should sell the remaining gold to invest in land at this time.

Expert advice:

Two years ago, the cost to buy 35 taels of gold was about 2.3 billion VND. If you can sell the remaining 20 taels at 90 million VND per tael as expected, the total capital will be nearly 3 billion VND, an increase of 30%.

Currently, the gold price is around 90 million VND per tael. With 3 billion VND, you can buy about 33 taels of gold.

If you switch to investing in suburban land, you need to consider a medium-term investment (at least three years) and predict the growth rate of each asset. Assuming you invest for three years to compare with holding gold:

• Expected Land Price: 2 billion VND

  • Land Investment Outcome: Loss
  • Expected Gold Price for Profit (million VND/tael): 61

• Expected Land Price: 3 billion VND

  • Land Investment Outcome: Break-even, opportunity cost loss
  • Expected Gold Price for Profit (million VND/tael): 90

• Expected Land Price: 4 billion VND

  • Land Investment Outcome: Profit
  • Expected Gold Price for Profit (million VND/tael): 121

• Expected Land Price: 5 billion VND

  • Land Investment Outcome: Profit
  • Expected Gold Price for Profit (million VND/tael): 151

For example, by 2027, if you expect the land price to increase from 3 billion VND to 4 billion VND (an average of 11% per year), the gold price needs to reach 121 million VND per tael to break even compared to the land purchase option.

If the gold price is below 121 million VND per tael, the land purchase option is better. If the price is above 121 million VND per tael, holding gold is more effective.

However, predicting the price increase of real estate or gold over the next three years is not easy. The decision to switch investment channels largely depends on your expected returns, risk appetite, and liquidity, especially in an economy that has not yet fully recovered.

Switching investment to suburban land can bring high returns, but it also carries significant risks. Not all purchased land will increase in value, as it depends on factors such as legality, planning, and usability.

Price increases also depend on future population density and factors that attract residents, such as industrial parks, factories, and shopping centers. Additionally, gold has high liquidity, making it easier to buy and sell compared to land.

With a budget of 3 billion VND, you can invest in subdivided land plots or land in 1/500 planned projects in the suburban areas of Ho Chi Minh City.

Subdivided land plots have a unit price per square meter that is 2-3 times higher than larger plots not yet subdivided, due to additional costs for infrastructure, legal completion, taxes, and the initial developer's profit.

Land in 1/500 planned projects is usually located in planned residential areas with developed infrastructure. Buyers of this type of product are looking for safety in planning, legality, and the developer's reputation. This product can be invested in the medium term to meet local residents' housing needs.

Therefore, you need to carefully consider your risk appetite and medium-term investment goals. In the current economic context, with income trends declining, I think buying land is only suitable if you have housing needs or want to preserve capital, prioritizing locations near the center of Ho Chi Minh City (good products usually start at a minimum of 5 billion VND).

With a budget of 3 billion VND, you may need to consider investing further away, in suburban provinces. The best time to invest in suburban land may be at the end of this year or early next year.

You might consider continuing to hold gold until the end of the year, as in the medium to long term, this asset may still increase in value, even if slower than land. During this time, you can spend more time researching the market, building relationships with brokers or local experts, conducting on-site surveys, and gaining experience. When the market shows clear signs of recovery, it will not be too late to switch investments.
 

For more information about real estate projects in Ho Chi Minh City and other provinces, please contact FTT LAND!

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