Danang is a property shining light

Furama Villas

With the government’s current monetary tightening policy, high inflation and lending interest rates, the nation’s realty market has slumped since the middle of last year.

While almost all residential developers across the nation fail to lure customers, Danang’s second-home developers are smiling.

Furama Villas, which is developed by Ariyana Joint Stock Company, is a case in point. According to Nguyen Canh Son, general director of the company, the under-construction project had sold 60 per cent of the total 131 villas ranging from 300-1,000 square metres for at least $600,000 per unit. Most of the sales were recorded in the first and second quarters.

“The sales rates were slow in the third quarter as Vietnamese people are traditionally afraid of purchasing houses in the July lunar month. However, we still welcomed many customers visiting and exploring the model villas in the third quarter,” said Son.

VinaCapital has also secured great success with its Danang Beach Resort project, which has launched to the market three key second-home components on the market over the last two years, including the Ocean Villas, the Dunes Residences and Greg Norman Estates.

David Blackhall, deputy managing director of VinaCapital Real Estate, said all the 115 detached villas at the Ocean Villas and the 15 detached golf villas at the Dunes Residences had sold out.

Meanwhile, the 33-villas Greg Norman Estates which was launched this June at the time considered as the hardest time developers to suffer when the real estate market came to almost a standstill, is approaching 50 per cent sold even the villas’ prices range from $800,000 to $2 million per unit.

Blackhall said the real estate market was challenging, particularly the condominium sub-sector. However, the landed property was still sought after and if the pricing was right.

“While the macroeconomic factors have impacted on the economy and the property sector over the past six months or so specific sub sectors within the property sector have demonstrated ongoing activity,” he said.

“VinaCapital has proven with its projects in Danang and Nha Trang that if the projects are well located, offer modern designs and a ‘value-for money’ product that is affordable to those domestic buyers then the demand is still there albeit slower than one year ago,” said Blackhall.

Michael Piro, director of sales and marketing at Hyatt Regency Danang Residences, said although demand from domestic purchasers had slowed down over the past few months, the project had sold 89 per cent of its inventory of 183 condominiums and 27 villas.

“The Danang residential resort market has been surprisingly resilient despite the current challenges presented by Vietnam’s macro-economic climate as we have continued to see healthy transaction levels across our central coast portfolio,” said Piro.

“The buyers are typically characterized as the wealthy elite that have seemed to be somewhat insulated from the current economic conditions while maintaining a strong appetite for second homes," he said.

A Savills Vietnam’s Danang real estate market report showed that 72 per cent of owners of sold out condominiums and villas in Danang resort projects came from Hanoi, 16 per cent from Ho Chi Minh City and the rest Danang residents. These home-buyers mostly purchased the units for speculative investment, or leasing investment.

Piro added that as the domestic market had cooled down, he was seeing a resurgence of international demand, particularly from astute Singaporean investors who look to take advantage of a strong local currency, all time low borrowing rates and relatively affordable price points found in Vietnam.

According to Savills Vietnam, by the end of second quarter, Danang’s total villa stock was 720 dwellings provided by 13 projects and sold dwellings in the villa market reached 69 per cent with the primary asking price ranging from $770 to $4,700per sqm.

“These are still reasonable clearance rates for both products in the present tough market,” said Troy Griffiths, Savills Vietnam’s national director of research.

“It’s a fundamental supply and demand issue, with strong supply of condominiums expected in the future. Villas will continue to be attractive to investors who have the wealth to secure a product with limited availability,” said Griffiths.

Son from Ariyana said the holiday home market remained a good investment channel.

“Second or holiday homes are a new investment wave in Vietnam. When investing in a second home, a buyer aims to earn an income from the tourism market or to affirm their lifestyle and social strata,” said Son.

He said the Furama Villas would be managed by Furama Resort, a property had operated for 15 years in the tourism market and recorded 100 per cent occupancy in the high season.

“Therefore, leasing Furama Villas to tourists will be easier than other projects in the area because we have already had available tourist sources,” said Son.

He pointed out that other second home projects in the area such as the Ocean Villas and the Nam Hai had also managed to draw in tourists.

Blackhall said the Danang Beach Resort also offered a rental pool program whereby buyers of homes at the project can receive rental income by offering their home into the rental pool which is managed by VinaCapital’s in-house hotel management team