Changes required for central real estate

A view of Da Nang city (Photo: VNA)

Real estate developers in the region expected the market to rebound after a year of complexity, highlighted by the Ministry of Construction announcing solutions for removing obstacles for condotels, opening up hope for market recovery. Recent global developments, however, have temporarily dampened hopes for such an event.

Investor Nguyen Hong Nam told VIR that there are almost no primary or secondary land transactions at key projects in areas such as Golden Hills, One World Regency, Phuong Trang site, and FPT City, just to name a few. Along with this, due to rising pressure associated with bank loans, many investors have bargained land plots away. Such land plots at big projects are in a bleak situation, yet the market has still recorded some bright points in street-facing retail real estate, as well as land products in urban districts outside Danang.

Pham Huy, an individual land broker in the city said, “Retail land in the street is a type of product that is less profitable than the project land, so few investors are interested. Nowadays, the project land has completely stalled, casting less impact on retail sales in the street.”

For residential land types in the districts of Danang, with a relatively cheap price compared to the general market level of only about VND400-500 million ($17,400-21,700) per plot, it is less affected by general development in the local real estate market.

Phan Minh Thang, director of S-Germi Real Estate and Construction JSC, said that the main buyers of residential land in suburban areas are local people. The trading also takes place mainly in localities where the project is built, so it is less affected by the current pandemic.

“Last week we launched a new residential project in Que Son district of Quang Nam province, mainly low-cost land plots to serve the needs of local people. In a single morning, people deposited most of the plots introduced on that launch. Some buyers even had enough money to be notarised right in the morning,” said Thang.

Operations afoot

The coronavirus outbreak has significantly affected the tourism service business, hotel accommodation, and frozen the real estate market in Danang. However, with the projects under construction, the local developers still have to focus on building at full speed.

Le Dung, sales director of Ariyana JSC, said that the company held a topping-out ceremony marking completion of an important phase of Ariyana Beach Resort and Suites Danang project in December. Despite the influence of COVID-19, the project is being urgently deployed, striving for completion in June.

Other businesses have started new plans to maintain operation and financial resources. Nguyen Ngoc Tuan, general director of Da Thanh Investment and Development JSC, said that due to the impact of the pandemic, the company is temporarily suspending operations at its head office in Danang. However, at its branches in Hue city in Thua Thien-Hue province and Dong Hoi city in Quang Binh province, where the coronavirus is less complicated, the unit is still retaining normal business activities. “We now have 50 sales staff at the company’s branch office in Quang Binh to deploy sales of the Dream Homes project. Compared with Danang, the effect of COVID-19 in Dong Hoi is less serious,” Tuan said.

New strategy

Luong Linh, chairman of Thien Thanh Long Real Estate JSC, said that Danang and the central region’s real estate market is experiencing the most difficult period in the past five years. However, businesses still need to navigate the right path, choose the right product, and find the right customer to develop.

“Ups and downs are the natural situation in any market, and the real estate market is not an exception. This will be the beginning of a new recovery cycle in the near future, containing many opportunities for customers and investors,” Linh said.

For his part, Phan Minh Thang, director of S-GERMI JSC, said that real estate is going through hard times. At big projects in the city, the price exceeds VND10 million ($435) per square metre, and liquidity is very low because investors have all withdrawn.

The company, therefore, has turned to focus on developing small-scale projects with legality and adequate infrastructure, with products suitable for financial capacity and the purchase needs of the vast majority of locals in the outskirts of Danang.

“On March 22, we introduced the Que Son Residential Area project based in Que Son district of Quang Nam. As the price is affordable at around VND400 million ($17,400) per land plot, suitable for the buying needs of locals, in one morning almost all spots were fully reserved. This partly shows that the company has been navigating in the right way,” Thang said.

Along with changing strategy and direction, developers in the central region have also begun to adapt to operating from remote places instead of at headquarters, or in direct contact with customers at open-sale events.

Nguyen Huu Duc, director of Protech Real Estate Floor, said that following recommendations from the Ministry of Health on prevention of COVID-19, Protech currently has a policy allowing its staff to stay at home and operate through direct calls, Zalo, Facebook, and email. “This will reduce the risk for both employees and customers,” said Duc.