Vietnam has great potential in resort market development

Perspective of a condotel project in Phu Quoc Island, Kien Giang Province is offered on the market. Condotels are expected to be attractive products on the market in the future.- Photo dauthau.vn

Experts made the statement at a seminar on new trends and real estate investment opportunities in the second half of this year held in Hanoi on Wednesday by the CafeLand, a website specialising in information relating to the property market.

This year could be pivotal for the resort real estate segment, they said.

Dr Tran Dinh Thien, former director of Vietnam Institute of Economics, said foreign direct investment (FDI) to Vietnam has increased, boosting demand for investment in industrial and civil real estate. This creates high demand for real estate, including real estate for the tourism sector.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said the total number of tourism properties in Vietnam is still lower than that in other regional countries that have strong tourism development such as Thailand. Meanwhile, Vietnam's tourism sector has grown at 30 per cent annually.

While the country does have resort market hotspots like Da Nang and Nha Trang, they will soon be saturated.

In the future, the hotspots are likely to move to other locations such as Quy Nhon of Binh Dinh Province and Tuy Hoa of Phu Yen Province. Besides, some other potential points with faster growth include Phan Rang and Phan Thiet of Binh Thuan Province, Vo said.

In the long-term, the supply of condotels in Vietnam will be unable to exceed demand, according to him.

However at the beginning of 2019, condotel transactions reduced in some localities, likely due to the credit tightening policy for real estate and inadequacy in the legal system for condotels, he said.

Nguyen Thi Thuy Duong, director of communication and community support at Novaland Group, said regions that wish to develop resort real estate need synchronous development of the tourism sector and transport infrastructure.

For example, Phan Thiet plans to put an international airport into operation in 2022, connecting highways to HCM City. The period travelling from HCM City to Phan Thiet will reduce to one hour and 45 minutes.

She also agreed with financial expert Nguyen Tri Hieu’s opinion that the domestic resort real estate market must be developed sustainably to protect the environment and minimise impacts of development on the environment.

Besides that, Hieu wondered about the legality of resort properties like condotels, especially with secondary investors. Banks are very embarrassed when they receive condotels as a mortgage.

According to Hieu, condotels are a real estate product for doing business, so all regulations on land or tax should be considered as goods for trading.

He proposed the Government and the National Assembly should quickly resolve legal issues to create favourable conditions for banks in accepting mortgages as condotels while homebuyers are assured of ownership rights.

Regarding legal documents for condotels, Deputy Director of Housing and Real Estate Market Management Department Nguyen Manh Khoi said the legal system is incomplete.

Khoi said at present, many investors do not understand clearly about the different kinds of resort property.

Investors will study carefully those property products, and resort real estate projects entering the market will be located in many places with diversification in kinds, said Khoi.

Binh Dinh and Phu Yen want investment to their resort market because they have land for the development of this market and airports, according to him.

In the first quarter of this year, Vietnam attracted about US$1.7 billion of FDI, an increase of 36 per cent year on year. Of which, the real estate sector in the last three years has always ranked second in attracting investment, especially resort property segment.

During this quarter, the number of condotels offered on the southern markets was higher than in northern and southern provinces, especially from Da Nang to southern provinces.

According to incomplete statistics, in 2018 there were more than 8,000 condotels opened for sale in about 12 localities, mainly in localities having many tourism investment opportunities such as Da Nang, Khanh Hoa, Ba Ria Vung Tau, Kien Giang, Phan Thiet and Quang Ninh, especially Quang Ninh accounting for 19 per cent, Da Nang – 14 per cent and Khanh Hoa – more than 26 per cent.

Of which, more than 7,800 units were traded.