Danang land plot segment takes divisive flight

Danang land plot segment takes divisive flight

Two spotlights

Following the real estate fever in 2016, Danang’s land plot segment continued to experience robust performance in 2017 with two spotlight segments.

The first was the land plot segment in the south of Danang and the north of Quang Nam, like the planned Dien Nam-Dien Ngoc New Urban Area. In the beginning of 2017, the segment warmed up thanks to good news from the city. Danang successfully hosted the APEC Economic Leaders’ Week, as well as implemented several large-scale infrastructure projects.

In the first quarter of 2017, the market saw land prices nearly double from VND2-3 million ($88-132) to VND4-5 million ($176-220) per square metre, even reaching VND8 million ($352) along the Hoang Sa extended street. Prices hiked in the area primarily because the Quang Nam People’s Committee has green-lighted a slew of resort projects at an investment promotion conference in the province. Meanwhile, the University Village project has been resumed with a total investment capital of VND20 trillion ($880 million).

To the east from a planned tunnel through the Han River in Van Don-Thuan Phuoc area of Son Tra District, land prices have escalated to a record high of VND20 million ($880) per sq.m. Prices normalised at VND10-12 million ($440-528) when the prime minister decided to suspend the project and reassess its feasibility.

The second spotlight was the northeastern area which used to be quiet before the latest news of Danang Railway Station, Lien Chieu Port, and Vingroup’s project in South Hai Van drew investors’ attention. This, coupled with infrastructure development, made the area more appealing to investors. Take Golden Hills for example—after a long delay, it completed the first phase in the second quarter of 2017 with a complete take-up.

Several projects have been hunted by investors like Pandora City, Lakeside Palace, Cham River Park, Phuoc Ly, Hoa Khanh Residence, Nam Tran Central Park, Northwest Urban Area, Phuong Trang Urban Area, and most recently, New City, which is located on the previous site of Tan Cuong Thanh Urban Area in Lien Chieu District.

Land prices have also been on a steady increase to VND7-10 million ($308-440) per sq.m in the areas next to Golden Hills, up to VND15-17 million ($660-748) in the centre of Lien Chieu District, which is almost the match of Hoa Xuan in Cam Le District.

This area is forecasted to become the hotspot of Danang’s real estate market, especially after Sun Group’s grand designs have been outlined for Hoa Ninh-Hoa Son Urban Area in Hoa Vang District. Accordingly, in a proposal submitted to the Danang People’s Committee, the group said it aims at inviting the world’s leading consulting firms like WATG, CallisonRTKL, Hyder, and WSP to conduct research and planning to ensure the success of the project.

Look out for suspended projects

In spite of the tremendous potential of the Danang real estate market, analysts have issued warnings to investors.

Southern Danang has seen a boom in the land plot segment in the past two years, but its infrastructure has yet to be fully developed. The construction progress is slow at most of the projects in the area, apart from some urban areas including FPT City, Hoa Xuan, Phu My An, Golden Hills and Sea View.

Most projects have been delayed for several months, although the developers have announced good sales performance and committed to completing infrastructure facilities on time. At the planned Dien Nam-Dien Ngoc New Urban Area, thousands of land plots remain undeveloped while buyers are waiting in vain for their ownership certificates.

Vu Trong Phung from real estate services firm 68 Land said that the land plot fever in Danang in the past two years helped change the façade of several areas in the central city and the north of Quang Nam. However, this will not be enough to solve deep-rooted problems, such as the locals being unable to settle down due to high property prices. In fact, many projects remain sparsely populated despite being sold out.

According to Tran Ngoc Thanh, general director of Dat Xanh Central Vietnam, developers have failed to create a vibrant community due to a lack of customer support and the incomplete infrastructure.

“When customers purchase a property either for living or investment, they need to carefully study the project and the developer, especially their capability and track record of project development. After choosing the project, investors and homebuyers should visit the site to observe the construction progress before spending money,” Thanh added.

Meanwhile, Phung noted that Danang features continuously strong economic growth and ever-increasing living standards. The city keeps luring in a large number of workers from other localities and the city’s population is projected to reach two million people in the next few years. As a result, according to real estate developers and brokers, the housing demand in the central city will rise in the coming time, and it will also push up prices.

Le Thanh Sang, director of Kim Thinh Real Estate, said that speculators are distorting the landed property segment in the city. There are several land plots left idle in Danang and the Dien Nam-Dien Ngoc in Quang Nam, with a majority in the hands of investors from Hanoi. At the same time, local people cannot afford land as the prices are exorbitant.

On the same note, Dang Thanh Thien, manager of the Alo Dat Danang news website, said that there is huge demand for affordable housing, but land gets pricey in the city. Also, many projects have been left undeveloped, serving as a deterrent for homebuyers to spend money.