Local investors take aim at Nha Trang

Local developers’ confidence in the region’s tourism potential is riding high

A number of international investors have abandoned hotel projects in the area and Vietnamese developers have stepped in to fill the void.
Australian company Alpha Ong has dropped its plan to develop a $20 million hotel and apartment complex in Tran Phu street.
The company broke ground on the Lucky Star complex two years ago, intending to build two hotels and an apartment block with 621 rooms and apartments overlooking Nha Trang Bay.
However, the site has been vacant ever since, although detailed architectural and engineering plans were prepared.
Sources close to the project said the foreign investor quit after failing to secure investment for the development and had sold its stake to a local investor, Ho Chi Minh City’s Volunteer Youth Construction and Investment Company.
The local company has raised the $28 million capital necessary for the project and broke ground at the site last week. Volunteer Youth is aiming to finish the four-star, 582-room hotel and 163-unit apartment block within the next three years.
Just a few hundred metres from the Lucky Star site, another Australian company has reneged on its hotel plans. The Outrigger, licensed in 1994 and built by Hasley Development, was a 14 storey sea-view property with registered investment capital of $8 million.
However, only the foundations were completed before the developer pulled out due to lack of funds. Local company Dong Hai bought out the project in 2001.
Now known as the Oriental Nha Trang Hotel, the company is to chip in $18 million to build a 198-room property with construction expected to finish next year.
Foreign investors now hold stakes in only two Nha Trang hotels, the Yasaka Saigon and the Lodge, after the foreign investor in the Ana Mandara Resort sold its stake in 2001.
Industry insiders said foreign-invested hotel projects in the city were often not financially viable and it was not easy for the developers to secure bank loans. In addition, the hotel business in Nha Trang relies mainly on Vietnamese tourists.
However, Vietnamese investors are strengthening their presence in this seaside resort city, acquiring abandoned projects and setting up new properties.
Two local companies are building hotels in Tran Phu street. One month ago, Hoan Cau Company broke ground on a $24 million hotel and retail block next to the Yasaka hotel while Khanh Hoa Trading and Investment Company is completing the 120-room Crystal resort.
Vietnamese developers have shown particular interest in resort developments in Cam Ranh Bay, 30 kilometres from the centre of Nha Trang, where a military airport became a civil facility three weeks ago.
Now there are fears that the growth in hotel rooms in Nha Trang and neighbouring areas will result in an oversupply in the very near future.
Four years ago, the only upmarket hotels in Nha Trang were the Yasaka, Lodge and Ana Mandara. Since then the VinPearl Resort & Spa has opened and many more similar projects are expected to open in the next few years.