The Ho Chi Minh City People’s Committee has issued Decision No. 85/2026/QĐ-UBND, effective from October 21, 2026, replacing Decision No. 49/2025/QĐ-UBND. The new decision sets out the factors used to determine development revenue, development costs, and other factors affecting land value when determining specific land prices under the residual method. Notably, the new framework provides more detailed classifications for construction periods and sales schedules based on project size, while also setting rates for business-related costs and a 15% rate for interest expenses and investor profit applicable to the relevant project categories. For property developers, these changes concern not only how land values are calculated but also require closer alignment among planning, implementation schedules, product absorption, and investment cash flows.
Table of Contents
1. Key figures to note
For high-rise residential projects, Decision No. 85 classifies sales periods according to the project's total gross floor area. These periods and sales rates are used as assumptions in calculations under the residual method. Where the project documents already specify the corresponding parameters, those documents should be considered in accordance with the order of application prescribed by the regulations.
Gross floor area | Sales period | Annual sales rate |
Under 50,000 m² | 2 years | 40% – 60% |
From 50,000 to under 150,000 m² | 3 years | 30% – 40% – 30% |
From 150,000 to under 300,000 m² | 4 years | 0% – 30% – 40% – 30% |
From 300,000 to under 450,000 m² | 5 years | 0% – 20% – 20% – 30% – 30% |
From 450,000 to under 600,000 m² | 6 years | 0% – 20% each year from Year 2 to Year 6 |
From 600,000 to under 750,000 m² | 7 years | 0% – 15% – 15% – 14% – 14% – 14% – 14% |
From 750,000 to under 900,000 m² | 8 years | 0% – 13% – 13% – 13% – 13% – 12% – 12% – 12% |
From 900,000 to under 1.05 million m² | 9 years | As allocated under the Decision |
From 1.05 million to under 1.2 million m² | 10 years | As allocated under the Decision |
1.2 million m² or more | 11 years | 0% in Year 1; 10% each year from Year 2 to Year 11 |
Source: Decision No. 85/2026/QĐ-UBND, cross-checked against the published legal text and reporting by Tuoi Tre. For the two largest project-size categories, from 900,000 m² upward, the full sales-rate schedule in the original Decision should be consulted when preparing a land valuation plan.
For high-rise residential projects with a gross floor area of 1.2 million m² or more, the sales rate is 0% in the first year, followed by 10% per year over the next 10 years. The occupancy rate for high-rise residential projects is 75% of the gross floor area.
For row houses and villas, the sales period ranges from one year for projects with fewer than 100 units to a maximum of nine years for projects with 3,000 units or more. For infrastructure development projects in industrial parks, the sales period ranges from three years for projects of up to 75 hectares to six years for projects exceeding 500 hectares. For industrial park and industrial cluster projects, as well as certain infrastructure projects, the sales period begins in the second year following the date on which the State leases the land.
In terms of costs, marketing, advertising and sales expenses are determined at 5% of total revenue as prescribed. Management and operating costs are set at 15% of total rental revenue for high-rise residential projects and office, commercial and service projects. Certain other categories, including row houses, villas, land subdivision projects, industrial parks and industrial clusters, are subject to a 5% rate. Special projects are subject to separate consideration in accordance with the applicable regulations.
Interest expenses and investor profit, taking into account equity capital and business risks, are determined at 15% multiplied by the total construction investment costs, business costs and the value of land use rights for the applicable project categories.
2. What is changing?
One of the most notable aspects of Decision No. 85 is not simply the expansion of the sales-period framework, but the greater specificity of the assumptions used to model project cash flows.
Construction schedules and sales schedules are prescribed according to project size. For example, a high-rise residential project with a gross floor area of less than 50,000 m² has a two-year construction period, with construction progress allocated at 50% – 50%. Projects ranging from 50,000 m² to under 150,000 m² have a three-year construction period, with progress allocated at 40% – 40% – 20%. As project size increases, the prescribed construction and sales periods are divided into longer time frames.
From a financial modeling perspective, allocating revenue over multiple years helps reflect the longer sales cycles of large-scale projects. However, a longer prescribed period does not necessarily mean that a project will be more profitable. Depending on the capital structure, collection schedule and implementation plan, a longer cycle may extend the payback period, increase financing costs and expose developers to greater market volatility.
It should be noted that these prescribed periods are assumptions used for land valuation purposes. They do not constitute a commitment that every project will complete construction or achieve its actual sales pace within those periods.
3. From the perspective of property developers
3.1. Land cash flows need to be viewed alongside project cash flows
When revenue is allocated over multiple years, developers need to assess land costs together with capital disbursement schedules, construction progress, the start of sales and the timing of customer payments.
The key factors that should be considered together include: land value – total investment – implementation schedule – sales absorption – revenue – cash flow – payback period. This is a financial management perspective and does not mean that Decision No. 85 establishes a separate cash-flow management formula for each developer.
3.2. Planning continues to have a direct impact on development potential
Decision No. 85 identifies factors affecting land value, including location, transport conditions, land area, dimensions and shape, factors related to construction planning, environmental conditions and land-use duration.
Therefore, the value of a land bank cannot be assessed solely on the basis of its area or unit land price. Its actual development potential also depends on planning indicators, permitted development products and infrastructure connectivity. These factors affect the investment plan and the project's ability to generate revenue.
3.3. Developer data is becoming increasingly important
Development costs must be determined based on relevant documents and information, such as planning documents, feasibility study reports, construction designs and documents appraised or approved by competent authorities.
Where the appraised or approved project documents do not contain specific information required for the calculation, the organization responsible for land valuation may use information and data provided by the developer in accordance with the regulations. The developer is responsible for the accuracy of the data provided.
Accordingly, managing data on planning, total investment, design, project schedules and product mix serves not only project management purposes but also plays an important role in preparing a land valuation plan.
4. Three long-term considerations
First, greater specificity in the assumptions does not replace the valuation and appraisal process. A more detailed regulatory framework provides a common basis for preparing and reviewing land valuation plans. However, the application of each parameter must still comply with the conditions and principles set out in the regulations, including consideration of project documents, implementation schedules and relevant project approvals or decisions.
Second, the 15% rate should not be equated with a property developer's actual WACC. The 15% rate under Decision No. 85 is used to estimate interest expenses and investor profit for land valuation purposes under the residual method for the relevant project categories. It is not a default WACC applicable to every company or project.
Third, a larger project does not necessarily mean higher product absorption. Sales periods of up to nine to 11 years reflect the allocation of revenue over longer cycles for large-scale projects. From a management perspective, this places greater emphasis on financial capacity, investment phasing, product mix and schedule control. However, actual sales absorption will continue to depend on market demand, pricing, product quality and the specific business conditions of each project.
Conclusion
Decision No. 85/2026/QĐ-UBND is notable for providing greater specificity for a number of input assumptions under the residual method, ranging from construction periods, sales schedules and sales periods to occupancy rates, business costs, interest expenses and investor profit.
For property developers, the significance of the new regulations lies not merely in the 15% rate or the maximum sales period of 11 years. More importantly, they require planning, legal documentation, construction plans, sales schedules and project cash flows to be considered together when preparing a land valuation plan.
In the long term, the effectiveness of a development project will depend not only on the location of its land bank, but also on the ability to accurately assess its development potential, organize implementation effectively, and convert invested resources into revenue and cash flow under actual market conditions.
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Lê Triều
TBP Marketing