Da Nang property surges after APEC

Progress: CocoBay resort under construction in Da Nang city. - VNS Photo Cong Thanh

In its survey of the central city, property consultancy firm Savills Viet Nam said the already strong tourism growth would get a further boost, and its warm climate, golden beaches and rich culture would draw more visitors to its resorts and hotels.

The report said the city had seen a first half GDP growth of 8.1 per cent year-on-year,. Foreign direct investment increased year-on-year by a stunning 269.5 per cent with about US$14.3 million disbursed. Credit growth in the first half reached a six-year high of 7.5 per cent. The hospitality boom continues as more international and domestic flights are added and major hospitality brands jostle to enter the market.

Tourism is a driving force for the city economy. Visitors increased by 72.2 per cent to more than 1.2 million in the first six months this year, with total Viet Nam visitor numbers up by about 33.2 per cent to 3.2 million.

The opening of infrastructure projects for the APEC summit, including airport expansion and the Dien Bien Phu-Nguyen Tri Phuong road tunnel. will service future growth. Rapid expansion of resort projects along the entire coast gives Da Nang world class capacity to service northern Asian markets, the report said.

It added that, to the south, the recently completed Cua Dai bridge in Hoi An permitted further expansion and with the US$4 billion casino, golf and entertainment complex at Hoiana well underway, the city’s attraction was likely to increase. The golf coast continues to grow in popularity. The existing four courses are already well patronised..

Nguyen Thi Kim, owner of the Thien Kim Real Estate transaction centre in Da Nang, predicted a surge in the retail segment of the property market after the APEC meeting.

“There are busy transactions of small hotels and apartment projects in the city while big property developers are likely to flock to the city seeking investment chances in large resorts and apartments," she told Việt Nam News.

The sales are likely to increase as small investors speculate on a surge. More investors from Ha Noi and HCM City are likely to go to Da Nang to test the market. If they do well, they are predicted to pour more money into big projects.

“There is a slight change in small and little projects. Investors are develeoping entertainment and resort projects in coastal areas in Dien Nam-Dien Ngọc near Hoi An city, including Cocobay, Sheraton, Vinacapital.

Kim said some investors still hesitated to pour money into big transaction as they waited for official reports on the inflation rate and finance from state agencies

The Savills report said the real estate market would continue to remain robust, despite the likely demise of the Trans-Pacific Partnershi, adding that the Regional Comprehensive Economic Partnership (RCEP), involving China, as well as membership of ASEAN and the Viet Nam-EU Free Trade Agreement, would be important drivers for continued investment.

The report said that there was considerable interest from foreign investors, given the nation’s strong GDP growth, a relatively stable currency, young demographic, rapid urbanisation, as well as rapid growth in the domestic consumer market driven by one of the fastest growing middle classes anywhere in the world.

This interest is fuelling investment across all real estate sectors from industrial to office and residential to retail. In addition, the rapid growth in tourism arrivals, both foreign and domestic, is creating a boom in the hospitality sector.

While interest remains strong from Japan, Korea, Singapore and increasingly, China, foreign investors still find it challenging to identify quality real estate investments with clear ownership. The report said transactions involving operating assets would remain scarce and that most would involve development projects. Many foreign developers sought to secure long term partnerships with local counterparts.

According to Pham Thai Binh, head of the retail department at Savills HCM City office, said Da Nang and central Viet Nam were yet to become a booming market because local spending habits were thrifty and young people hesitated to shop for luxury brands.

Despite the introduction of luxury malls like Vincom and Parkson, they serve more as entertainment and cuisine centres rather than shopping centres, he said.

Da Nang is yet to be identified as a key market in the development plans by luxurious fashion brands like Zara, H&M, Uniqlo, but in the next five years, the central city could be a favoured shopping centre, when the two major markets of Ha Noi and HCM City are saturated, Binh said.

He said Le Duan Street, a popular shopping hub, would continue tobe a major destination for retail and shopping investors..

According to Savills, Da Nang will become a magnet for a series of fast-food brands, including McDonalds, Phuc Long, Lotteria and Kentucky.