AGainst the odds

September 14, 2012 | 15:16
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Hard economic times have been taking a toll on all aspects of the high-end market, including sales of vacation homes and residential condominiums. Michael Piro, general director of Vietnam Sotheby’s International Realty, explains how despite this, he still manages to sell its high-end properties.

Have you seen any signs of recovery in demand for high-end properties in Vietnam?

We are certainly seeing a resurgence in interest in high-end properties in Vietnam.  This trend has become more pronounced over the past 60 days as inflationary pressure has subsided and the State Bank has responded by cutting key policy rates and reducing the deposit cap. Given the improved lending environment and lower deposit rates, demand for real estate is increasing and the high-end market is beginning to show signs of recovery, backed by improved consumer confidence.   

When looking at the market for super luxury properties (bespoke estates, penthouse units, beach villas), demand has remained relatively stable over the past 12-18 months, demonstrating financial resilience amongst the truly wealthy elite.  During the economic downturn we expected demand for super luxury properties (+$1.5 million) to experience slow absorption, however, we have continued to sell these properties at a stable rate.   
What’s about demand for Hyatt Regency Residences in Danang and Indochina Plaza Hanoi condominiums which you are selling in particular?

IPH residences are ideally positioned to benefit from the recent shift in the market, given the project is nearly complete and has clearly met the market’s expectations in terms of quality and design standards – a rare achievement in today’s market.  Given the construction status, buyers now have the opportunity to get a first-hand view of exactly what they are buying, thus eliminating any delivery risk and making prospects more comfortable with their investment. This trend has been evidenced by the recent uptake in sales activity with 11 sales in August following a very strong month of July with over 20 sales.  We expect sales to accelerate further as we fully complete the development, begin our mass handover program and commence retail operations in the coming weeks.   

At the Hyatt Regency Danang Residences we have witnessed a similar trend, having sold over 30 per cent of our remaining inventory since the beginning of the year, despite economic turbulence.  All of the sales are the direct result of either a referral from an existing owner or a guest on the property.  This is very encouraging for us as it demonstrates the highest level of satisfaction amongst our existing clients who are referring their friends and family and an incredible guest experience as hotel visitors are becoming owners.

Where is demand coming from?

At IPH we continue to see demand driven by end-users who are looking to upgrade their accommodation.  The majority of the buyers are coming from surrounding districts within a 2-3km radius of the project site.  We are starting to see some investors re-enter the market, attracted to the rental potential of the units as they clearly meet the needs of discerning foreign tenants. With a full leasing program in place, managed by Vietnam Sotheby’s International Realty investment, we see significant upsides in the project. 

At the Hyatt Regency Danang Residences, Hanoian’s continue to drive the sales, however as the project is now complete, over the past six months we have witnessed equal demand from international purchasers and investors from Ho Chi Minh City.  
How has the taste of buyers changed during the economic hardship?

As the market is turning, a more mature and prudent buyer is emerging - one who distinguishes between developers and quality, while making a distinction between price and value. They are showing preference for complete or nearly complete product, as opposed to ‘off-plan’ inventory because they have grown skeptical of developers and their commitment towards project delivery and quality.  

And how has your sales strategy changed?

In terms of our sales strategy, we are moving towards a much more direct means of communicating with potential clients.  We do not rely on mass mail or email blasts to generate business.  We focus on nurturing our existing relationships to generate new business.

This guiding principle is founded on the belief that it is easier to keep an existing client than to go out and find a new one.   When approaching new clients, we believe in a personalised approach and direct communication that begins with establishing trust and a deep understanding of a our client’s needs in terms of both lifestyle and investment objectives.

Discounts have been rampant across all segments over the last year, why not in Hyatt Regency Residences or Mongomerie Links Estates?

The stability of pricing at the Hyatt Regency Danang Residences and Montgomerie Links Estates is testament to both the strong demand for these unique properties and the financial wherewithal of Indochina Land which, unlike many other developers, is extremely well capitalised.

Will the boom in the resort property market in Vietnam be sustained?

With a 3,000km coastline and strategic location within the region, Vietnam boasts strong fundamentals for resort property sales.  The market has historically been driven by domestic purchasers and to ensure the market sustains its current pace with further expansion, we will need an influx of foreign purchasers to enter the market.  For this to happen, the most critical components are flights from critical destinations within the region and quality product with investment and lifestyle benefits.

When destinations similar to Danang begin to receive regular direct flights from regional hubs such as Hong Kong and Bangkok, I am extremely confident the market for quality resort properties with branded operators will achieve a new level in terms of benchmark sales rates and prices.  Given my time selling property in the Central Coast over the past five years, as far as I am concerned, it is not a matter of if, it is simply a matter of when.  

Does Sotheby’s have any new properties expected to launch in the near term?

Vietnam Sotheby’s International Realty is extremely discerning when evaluating properties to represent, especially on an exclusive basis. We conduct a thorough due diligence process evaluating the contractors, developer’s credibility, and most importantly, the value proposition of the product. We are very pleased to announce that we have identified a property and developer which meets our stringent criteria.

We recently have been appointed the exclusive sales agent to represent Fusion Group’s new and exciting addition along Vietnam’s beautiful Central Coast, Fusion Suites Danang Beach. The development is truly unique, offering fully furnished condominiums with spectacular views of the East Sea with prices starting from starting from VND1.3 billion. With Fusion Group managing the property and an innovative approach to hospitality, Fusion Suites Danang Beach is set to become the Central Coast’s hottest new property.   

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