Prospects for green tourism real estate development

Do Chi Cong, member of EuroCham and general director of SB Invest

According to the United Nations World Tourism Organisation (UNWTO), Southeast Asia will become the fourth largest tourist attraction in the world, with Vietnam also developing a green and sustainable pathway over the next ten years. In your opinion, what is the core element of green tourism?

Green tourism advocates for minimal detrimental impacts on the local environment, biodiversity protection, renewable energy, the promotion of natural and cultural heritage, environmentally-friendly products, and the active participation of local communities.

Green tourism is the key to responsible and sustainable development and respecting natural elements. Minimising negative environmental impacts and creating a healthy environment are all at its core.

Thus, to be recognised as a green tourism product, all tourism services such as tours, hotels, restaurants, and golf courses must meet the above criteria.

As an expert in the field of tourism and resort real estate, I think that Vietnam still has a lot of potential and room for development to attract foreign investors into the green economy, especially in the high-end resort real estate segment.

After a long period of stagnation, the resort real estate segment is expected to continue to maintain its attractiveness and growth prospects. How do you evaluate the current situation of resort real estate in Vietnam?

Objectively, there are pros and cons.

Tourism has become a spearheading economic sector and the government has issued many supportive policies, which is the biggest advantage.

On January 22, the prime minister issued Decision No.147/QD-TTg approving the strategy for tourism development up to 2030.

Accordingly, by 2025, the average growth is expected to reach 12-14 per cent per year, and a direct contribution to GDP of 12-14 per cent. In 2030, total revenue from tourism should reach 11-12 per cent, contributing 15-17 per cent of the country’s GDP.

The Ministry of Culture, Sports and Tourism has also issued a tourism development action programme for the 2021-2025 period. These are extremely important legal frameworks for the development of the tourism industry in general and tourism real estate in particular.

The second advantage is the rapid growth in the number of accommodation options. According to statistics from the General Department of Tourism, the whole country had only around 2,000 tourist establishments with nearly 95,000 rooms in 2009, but by 2019 the number had increased to 22,000 with about 500,000 rooms.

Thus, after just over 10 years, the figures for tourist establishments and rooms had increased by 11 and 5.2 times respectively. This is spectacular growth for an emerging market like Vietnam.

Statistics as of September from the Vietnam National Real Estate Association revealed that in 15 localities, there were a total of 239 tourism real estate projects with more than 114,000 condotel apartments, 24,000 villas, and 30,000 shophouses. The total value of these three products stands at about $30 billion.

However, the resort real estate market still has legal problems that have not been resolved.

Firstly, the concept of tourism real estate has not been specified in the legal documents for the real estate and construction industries. Therefore, this field still does not have a clear legal foundation for investors to build a stable and sustainable orientation.

Secondly, tourism real estate is currently subject to the general regulation of many different legal systems, mainly related to residential real estate, business investment activities, and management, supervision, and use of projects. The application of legal provisions from different fields leads to a lack of consistency and synchronisation in the application of state and local agencies, causing confusion in the process of addressing work. Therefore, enterprises face many obstacles due to unclear processes and procedures.

In addition, financial institutions face risks with capital financing for tourism real estate investment and dealing with related bad debts.

Can you suggest some solutions so that Vietnam can attract more strategic investors to promote the development of green and sustainable tourism real estate?

Vietnam possesses a lot of potential and advantages for the development of green tourism real estate. We need to create an attractive playground for foreign investors, which means that the government, as well as ministries, sectors and localities, need some wide-reaching solutions.

Firstly, it is necessary to supplement and complete the legal framework for tourism real estate. We need to add specific regulations for the sector in terms of construction, investment, and credit activities. These should include supplementing regulations on granting land use right certificates for tourism real estate, transferring tourism real estate purchase and sale contracts, and capital mobilisation.

At the same time, it is necessary to identify the types of tourism real estate in the Law on Real Estate Business and the Law on Construction and consider providing specific sanctions for investors and related parties when making commitments to investors in the market.

Secondly, there should be a synchronous policy to develop transport infrastructure in all provinces to promote regional connectivity. The government needs to study and develop planning strategies for the development, especially the north-south expressway, airways, and railways, as traffic is the lifeblood of tourism.

The planning between provinces and cities must have a seamless connection so that the cultural heritage sites, coastal urban areas, and key eco-tourism areas are linked into a complete tourism network.

Thirdly, it is necessary to have a key strategy to promote the training and development of high-quality human resources.

If traffic is the lifeblood, human resources are the backbone of the tourism industry. In the last 10 years, although Vietnam has produced people with qualifications equivalent to those in other countries in Southeast Asia in terms of quality, the number is still not high enough to meet the development needs of the industry.

Therefore, the government and local ministries need to formulate high-quality development strategies in the new normal, enhancing the capacity and adaptability of human resources in the future.

At the same time, a methodical and advanced training plan for management personnel and direct workers in the field of tourism real estate is vital. Programmes and certificates need to be standardised in line with those internationally.

Finally, the building of information and databases for the real estate market in general, and tourism real estate in particular, should be strengthened to serve management and promote digital transformation.

This is a clear trend in the world today with the goal of forming a smart and green tourism ecosystem that connects entities including tourists, service providers, and state management agencies. We should all cooperate to build a green tourism environment, facilitating environmental, cultural, economic, and social sustainability.