‘Most liveable city’ in Vietnam has bright future in real estate

Progressive destination

The APEC Economic Leaders’ Week will take place in Danang this November. The event is a summit with leaders of 21 member economies attending. Thousands of official delegates, foreign and local reporters, international business people, and global leading entrepreneurs are set to descend on Danang.

A business summit with high-ranking leaders in the APEC business advisory council will take place, as will the Inter-Ministerial Conference on Foreign Affairs.

Being the venue for this international event has put the world’s focus on Danang and Vietnam’s real estate market.

According to the Savills research team, local market indices have been very positive. Danang’s GDP increased 8.1 per cent year-on-year in the first half of 2017. Registered FDI increased by a stunning 269.5 per cent year-on-year, with approximately $14.3 million disbursed. City credit growth reached a six-year high of 7.5 per cent in the first half of 2017.

Tourism is the key industry and the driving force of the city. In the first half of the year, visitor numbers increased by 72.2 per cent on-year to over 1.2 million, with Vietnam’s total visitor numbers up by approximately 33.2 per cent on-year, at 3.2 million. The city has been steadily emphasising its credentials as a regional economic and tourism centre, and this is confirmed by the increasing number of international direct flights.

New infrastructure and transportation projects are quickly moving Danang into a favourable spot for real estate development

The potential of real estate

The real estate market is tightly linked to macro-economic health and local economic development. A great deal of foreign direct

investment (FDI) has been directed into property, particularly into the residential, leasing, tourism, and industrial segments.

The Danang hospitality market has 86 three- to five-star hotels providing about 9,400 rooms. Average room rates are up 11 per cent with 22 per cent revenue growth per year. Average occupancy is up to 72 per cent. Five-star hotels are performing best, which shows Danang is an ideal destination for international visitors.

Demand from domestic travellers also keeps growing. Condotel absorption is high at about 70 per cent, with the developer-led rental profit share programme continuing to receive a lot of attention.

Having officially entered the Danang market in 2007 when the first resort property projects came to the market and opening its representative office in 2016, Savills is receiving an increasing amount of enquiries, both nationally and from major Asian cities. They are by people seeking to purchase homes in Danang because of the clean air and the issues they are having with air quality and congestion in the cities where they are currently based.

The new Han Market project is a step in the right direction for the city, creating a central area for pedestrian traffic which will reduce emissions and make the city more tourism-friendly at the same time. There are also major public transit projects currently being planned for the city, which are necessary in order to ease pollution and, in effect, make the city both greener and smarter.

Next steps

Since Danang was chosen to host the APEC Economic Leaders Week, the city has become an even more vibrant market. This has been supported by its many infrastructure development projects, a wide array of real estate products, and social and cultural development strategies coming along nicely. The APEC event and overall market development will maintain Danang’s significant growth potential.

Many experts affirm that the city becoming an international events destination represents a great opportunity. As ever, all opportunities must be grasped and acted upon strategically.

Developing infrastructure and event works and gaining more international attention as a quality venue will further promote city development. To make the most of this potential, Danang needs to take these chances to mature and turn domestic and foreign investment appeals into greater tourism, economic, cultural, and social development success.

By Matthew Powell - Director of Savills Hanoi