Resort sales follow realty resurgence

High-end beachfront property sales will likely continue to swell nationwide in 2016 thanks to the increased demand
and the recent recovery of the real estate market Photo: Le Toan

Segment upswing

According to Nguyen Tran Nam, chairman of the Vietnam Real Estate Association, 2015 saw the local economy stabilise, with an increase in local income. This led to a rise in the demand of the property sector generally, and a marked climb in demand for resort realty.

Duong Dung, director of Research and Consulting for CBRE Vietnam, commented that in 2016 resort development would reach fever pitch.

The basis for this statement lies in the recovery of the residential, retail, and office-for-lease segments of the real estate market in 2014 and its continuation into 2015.

“The resort segment will follow the trend of recovery of those other segments within the next six to 12 months,” Dung told a seminar themed “Resort Property 2016 – Potential and Challenges” organised early this month in Ho Chi Minh City.

Optimism vis-à-vis the resort segment is also attributed to the skyrocketing of tourist numbers to beachfront resorts such as the central cities of Nha Trang and Danang, and the southern island of Phu Quoc.

The latest figures from CBRE Vietnam show that the resort segment ascended sharply in 2015. In Danang, transactions increased 26-fold, from seven units sold in 2014 to 180 units in 2015. In Nha Trang, only 103 units were sold in 2014, compared to 481 units last year. The strongest ascent, however, was reported in Phu Quoc with nearly 850 units sold last year from zero in the previous year.

Great potential

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said that Vietnam had great potential in terms of resort development. “With recent regulations allowing foreigners to conduct real estate business in Vietnam, this segment will have added momentum to take off in the near future.”

Vo said, however, that a developer’s success in this segment would depend ultimately on their good brand name and professionalism. Additionally, developers must diversify the types of resort they build, so as to offer more options for new potential customers.

“Vietnamese developers should learn lessons from the development of resorts in other countries like Thailand, and adopt them here,” Vo said.

Peter Mach, vice chairman of Tanzanite International, the developer of The Hamptons in the southern city of Vung Tau, said that Vietnam had a particularly long holiday season. As such, it had vast potential for expanding resort and hotel accommodation. Besides, Vietnam lured about seven million foreign visitors per year with a great demand for resort products and high expenditure on tours. “These factors will spur the strong future development of the local resort market. We have no worries regarding a lack of demand for resorts,” Mach said.

According to Leong Boon Hoe, managing director of CBRE Singapore, Singaporean investors have recently set their sights on Vietnam’s vacation villas, as they are far cheaper than those in other countries.

For instance, a 300-square-metre villa in Sentosa Singapore is sold at between $12.6 million and $14 million, and a three-bedroom apartment is offered at between $500,000 and $840,000. Meanwhile, a similar villa at Sun Group’s Premier Village Phu Quoc Resort, in the Premier Village Danang Resort, or in Premier Residences Phu Quoc Emerald Bay was priced at between $1 million and $2 million; those at InterContinental Danang Sun Peninsula Resort between $3.8 million and $6.5 million; while a Sun Group apartment was offered at between $150,000 to $1 million.

Real estate broker and chairman of G5 Nguyen Quoc Khanh said that even high-end resort villas priced at $700,000 to $1.5 million were sold in their thousands in 2015.

“Buyers are paying attention to the potential gains from re-leasing their resort properties, and not so much as a second home, as was previously the case,” he said. The majority of projects are offering attractive rental yields at present, from 8 to 10 per cent per year.

From the south to the north

The local market has attracted many domestic buyers through the launch of many large-scale resort projects with synchronous infrastructure development and reasonable sales prices. In the south, Phu Quoc, Phan Thiet, Binh Thuan, and Vung Tau loom large on investors’ radar.

The Ho Chi Minh City beachfront villa market has heated up recently with the news that Vingroup received approval from the local people’s committee to become a strategic partner in implementing the 821-hectare Can Gio sea urban area.

During the past three years, a range of three- to five-star resorts have begun construction in the Ho Tram area of Vung Tau, including VietsoPetro, Ho Tram Beach Resort & Spa, Carmelina, Huong Phong-Ho Coc, Saigon-Binh Chau, Sanctuary, River Bay, Loc An, and Marine City. Vung Tau now has over 7,900 hotel and resort rooms, while the city welcomes around 16 million tourists per year.

Phu Quoc has undergone sweeping changes since a master plan for the development of the island was approved by the government in 2004, making it more attractive to tourists and investors from around the world. Major changes on the island include a road network that runs around and through Phu Quoc, the connection of the island with the national power grid, and the construction and upgrade of ports and airports, particularly the international airport.

Hefty investments from Vingroup and Sun Group, together with a long list of other major investors like LDG Group, CEO Group, and BIM Group have livened up the island’s investment environment. One of the island’s most iconic developments to date is Vingroup’s Vinpearl Phu Quoc resort complex on 300ha in Ganh Dau commune.

Sun Group is speeding up work on large resorts like J.W. Marriott, Premier Village Phu Quoc, and Sebel Phu Quoc, along with a water sports complex on Hon Thom and a cable car connecting it with An Thoi town.

According to the Kien Giang Department of Planning and Investment, the southern province has licensed almost 200 investment projects with a combined registered capital sum of around $10 billion.

The central provinces, meanwhile, still boast the country’s most popular destinations. Graced with some of the most beautiful beaches in the world and located in close proximity to world-famous cultural relics such as Hue citadel, Hoi An ancient town, and the holy land of My Son, Danang has continued to attract millions of domestic and foreign tourists. Unsurprisingly, the resort and hospitality sector there continues to go from strength to strength.

Nha Trang has also been luring many buyers for vacation properties in recent years, which has caused many apartment projects to increase their prices. Some outstanding projects include Costa, Cham Oasis, Stellar, and Muong Thanh. The heating up of the property market in this city has motivated investors to develop their apartment and villa projects by the end of this year, including in Phuc Khanh 1 urban area, Royal Marina, the Riviera, and Mipeco urban area.

Even though the northern provinces have no easily accessible beaches to speak of, developers are still pursuing the sale of resorts here. Syrena Vietnam Investment and Development JSC (Syrena Vietnam), the property development subsidiary under BIM Group, recently launched its Green Bay Village and Lotus Residences in the northeastern province of Quang Ninh’s Halong city. These projects have proven quite attractive to second-home buyers.

FLC Group, another real estate heavy hitter, opened its five-star FLC Vinh Thinh resort in the northern province of Vinh Phuc last week, becoming the province’s biggest luxury resort so far. The group also began work on the resort’s second phase of construction, covering 250ha, with the total investment of VND4.6 trillion ($286.4 million).