Danang burns bright on property map

The region offers spectacular tourism potential and is increasingly at the forefront of marketing campaigns to draw more visitors to Vietnam

Leading real estate firm CB Richard Ellis last week released a highly positive outlook for the city’s real estate market. Bich Ngoc reports.
Danang was once considered home to poor infrastructure and untapped potential. Today, the city has emerged as the central coast’s economic power house, logistics hub and biggest tourist destination.
Highlighting the city’s turnaround in prominence, is the Danang airport. Now the country’s third largest, it hosts weekly flights from Singapore, Bangkok and Siem Reap in addition to a number of domestic flights that operate daily.
In an effort to keep pace, the number of public works being undertaken by the metropolis is also surging. Phase one of central Vietnam’s largest Fair and Exhibition Centre, the East-West Economic Corridor, Hai Van Road Tunnel, National Highways 1A and 14B expansions, the Thuan Phuoc Bridge and Son Tra-Dien Ngoc Coastal Road are currently under construction.
Much of this growth has been attributed to tourism. According to the Danang Department of Tourism, between 2001 and 2006, international overnight visitor arrivals to Danang recorded an average annual growth rate of 7.3 per cent, while domestic tourism grew 12.6 per cent over the period. The city was also selected as one of the top six most luxurious beaches in the world by Forbes Magazine.

Retail market booms
CB Richard Ellis’ report paints a picture of an overnight renaissance in Danang’s retail market on the horizon.
“We anticipate an influx of regional and international retailers opening shop in Danang that offer a wider choice of quality products and brands than ever before as we have already seen in Ho Chi Minh City and Hanoi,” said Richard Leech, CB Richard Ellis’ Vietnam director.
A Big C shopping centre is set to open at Vinh Trung Plaza in November that will be followed by the high-end Indochina Riverside Mall by the year’s end.
Traditionally, Danang residents have been burdened with lower incomes per capita than the big cities of Ho Chi Minh City and Hanoi, there are signs that a middle class is emerging, CB Richard Ellis noted.
More tourists are visiting the city centre than ever before, driving retail sales and providing greater retail and entertainment choices to city residents.
The Danang retail market is still in its infancy with predominantly shop front strip shopping and small open front shops being the order of the day.
The majority of retailers are still at the lower end of the spectrum with some middle ranking operators beginning to take hold. CB Richard Ellis went on to warn that there is a prevalence of poor quality counterfeit products in the market that are partnered with a high concentration of low end, poor quality fashion and accessory outlets.
However, the opening of Big C continues to generate a huge amount of interest and momentum in the market. To date, 90 per cent of available retail space has been doled out.

Commercial space to roam
Commercial office space in the city enjoys 96 per cent occupancy rates. By the end of 2006, the city housed more than 20,000 square metres of leaseable space.
CB Richard Ellis expects that an additional 35,000sqm will be available to the market by the year’s end, with that number forecast to grow to around 100,000sqm by 2010.
The market is being fuelled by companies looking to expand or upgrade their premises. This is creating fierce competition as landlords of existing poorer quality grade C buildings offer cheaper rents and incentives to try and stem the exodus from their properties.
“Over the next few months we expect to see more national and international companies particularly banks, financial services companies and trading companies obtain their investment licences and commence operations in Danang, absorbing much of the new supply,” Leech said.

Residential market glows
According to CB Richard Ellis research, condominiums are drawing strong demand in luxury investment properties from Hong Kong and Japanese residents as well as wealthy Vietnamese and Viet Kieu returning to Vietnam for re-settlement and investment.
Demand is also being fuelled by expatriates from the US, Europe, Singapore and Canada. The emerging middle class and greater demand from foreign and Vietnamese workers from other cities coming to work in Danang are also factors in forecasted growth.
There is currently a huge amount of projects planned and underway in the region.
New resorts and hotels have also begun to take shape. It is expected that a greater influx of expatriate and Vietnamese workers from other cities working on the projects will be scouting accommodation and investment opportunities in the area.

Resorts open doors
There are now nearly 20 resort projects planned to be built in the area by 2020. Many of them have investment capital of more than $100 million.
Leech said that the developers would adjust their investments according to the market’s demand.
“They [developers] are very smart and will not provide the market with too much at the same time, they know if they do that they would obviously lose money,” Leech said. However, he was worried that Danang People’s Committee would place too much pressure on the developers to roll out their investments too quickly. “You know the property must be lined for five or ten years since allocation, therefore they will not develop all of the site immediately, but provide some products for sale and develop in phases,” he added.