Resort developers yet to find the sun

A case in point is Archi Invest, the developer of the Nine Ivory Resort and Country Club, which recently offered a flexible package to woo customers.

Accordingly, the company is selling 24 Ivory bungalows in Ba Vi district on the outskirts of Hanoi for  VND1.3 billion ($62,000). This sum is paid for the land only. Customers will have to pay another VND900 million ($42,800) for construction. However, if they do not want to pay the construction cost, they can allow  the developer to lease their villas in five years.

The Ivory bungalows are a new type of property in the Nine Ivory Resort and Country Club, which was first launched for sales in July, 2012 and designed with three-bedroom villas only and prices starting at around VND5 billion ($239,000).

Nguyen Thanh Trung, deputy general director of Archi Invest, said that holiday property segment was not immuned from the impacts of the stagnant real estate.

The company therefore decided to redesign the villas  to make them more affordable. “It is very difficult to sell those villas because of high prices if we left the old design unchanged,” Trung said.
Trung said the company also re-designed a villa into two independent bedrooms. “This way opens opportunity for leasing every room for tourists, instead of leasing the whole villa as was required previously,” Trung said.

Archi Invest is not alone in  changing business strategy to adapt to the real estate market’s downturn. A number of tourism property developers in the north are offering holiday villas at the prices of  VND2-3 billion ($95,000-142,800), instead of over VND5 billion ($238,000) as previously.

Sapa Land Joint Stock Company has recently sold its villas and semi-detached houses in the northern hill station of Sapa at the prices  of VND1.7-1.9 billion ($80,900-90,500) per unit.
The adjustment of design and price now is a vital way for developers to endure the gloomy real estate market, experts say.

The holiday property development and sales were in its prime between 2008 and 2010, when projects like Hyatt Regency Residences and Ocean Villas in Danang were sold for at least $180,000 per condominium and $400,000 to $1.4 million  a villa.

However, the market has slowed down since then and to 2012 slow progress was seen in both project development and sale activities. There have been very few transactions of holiday properties in tourism destinations  such as Sapa, Danang and Phu Quoc.

Many of vacation home projects have been halt or being implemented in very slow progress. Among those are Six Senses Saigon River in Dong Nai province, The Song in Danang city and Dragon Pia in Nha Trang.

But according to Guy Major, national director of residential sales, Savills Vietnam, holiday property has so far been less affected by the recession thanks to its long product life cycle and investment selectivity.

“Investing in holiday property requires players with huge amounts of capital and long term visions,” said Major.

Major stressed that when individual investors tend to search for sustainable assets, holiday property is an option.

Savills is expected to launch sales of luxury villas at the mammoth integrated resort Laguna Lang Co in Thua Thien Hue province in the first quarter of 2013.