Vietnam's resort real estate "hibernates" during summer

There are not many optimistic signs that resort real estate can recover soon, posing a difficult problem of "breaking the ice" for the mountain of inventory worth up to tens of billions of dollars.

In early August, The Grand Ho Tram Strip opened a new hotel and villa block called Ixora Ho Tram by Fusion. According to Mr. Walt Power, Managing Director of The Grand Ho Tram Strip, the launch of this project demonstrates a commitment to continue promoting investment and the construction of subsequent areas, promoting continuous tourism development in Ho Chi Minh City. Furthermore, this business also wants to take advantage of opportunities because the domestic tourist market is developing well after the COVID-19 epidemic.

The burden of inventory in the wave of cutting losses

This is also a rare large-scale project launched in a context where the tourism industry still faces many challenges. A recent report by Savills Vietnam shows that in the first 8 months of 2023, the average room capacity of the Vietnamese market only reached 40%, nearly 20% lower than the pre-pandemic level. Famous tourist destinations such as Nha Trang, Da Nang, Ha Long... have not yet returned to the bustling tourist period before the pandemic.

In the context that the number of international tourists has not yet recovered to pre-pandemic levels and domestic tourists are also facing poor purchasing power due to economic difficulties, resort real estate still has no bright spots. In fact, a wave of cutting losses is taking place in many areas that were previously hot spots for this type of real estate, as investors face the pressure of no tenants and the pressure of maturity from bank loans.

For example, according to a survey by Batdongsan.com.vn, in Phu Quoc, resort villas in Ganh Dau used to be traded for VND19-20 billion per unit but are now being sold for only VND13–15 billion per unit. In Nha Trang, many villas are being sold for VND16-18 billion/unit, down from the price offered in 2021 of VND20-23 billion/unit. The condotel segment in Nha Trang recorded an average loss of VND100-300 million/unit.

In the bigger picture, according to the second quarter report of the Ministry of Construction, despite positive motivations from policy mechanisms and bank interest rates, the amount of resort real estate inventory continues to increase compared to the previous year. in the same period last year.

According to DKRA Group's report, the cumulative number of condotel inventories as of June increased to 42,364 units. Of which, the total inventory of coastal townhouse properties increased to approximately 30,000 products. As for beach villa products, cumulative inventory by the end of the second quarter of 2023 will reach 15,000 units in both the North and South. Even more gloomy, according to DKRA, the whole country had only 1 resort real estate transaction in August, down 99% over the same period.

Challenge to "break the ice"

According to DKRA's report, the tourism industry's recovery has not been as expected as well as interest rates are still high, affecting the psychology of customers buying resort real estate. Meanwhile, a representative of CBRE Vietnam commented that resort real estate is forecast to be difficult to become vibrant again like in the previous period. Because investors must focus on restructuring business activities, racing to relieve bond maturity pressure at the end of the year.

Therefore, many ongoing resort projects are interrupted due to the investor's lack of cash flow and constantly having to delay the opening date. The current recorded transaction volume mainly comes from products with full legality, operated by international brands or with average prices, about less than 40 million VND/m2; And resort products priced at over 10 billion VND are completely illiquid.

Marina in Nha Trang. Photo: Quy Hoa

Mr. Vo Hong Thang, Deputy Director of R&D DKRA Group, said: "The economy faces many challenges and tourism has not recovered as expected, which are factors making the transaction situation in this field less positive." . And Mr. Mauro Gasparotti, Director of Savills Hotels, commented: "In addition to the slow recovery of demand, oversupply, mainly at coastal destinations, contributes to increasing challenges for hotel business activities." hotel".

Some investors plan to reopen/open new sales in Long Hai, Ho Tram, Vung Tau, Phu Quoc, and Da Nang areas. When liquidity is low, many investors continue to apply interest rate support programs, quick discounts of up to 40-50%... to stimulate buyers. According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, difficulties lie ahead for investors in this field as inventory products increase. "Therefore, investors need to introduce sales policies with appropriate prices, flexible payments, delay schedules, and support good interest rates to increase demand," Mr. Chau said. This is also the problem of "breaking the ice" for the mountain of inventory worth up to tens of billions of dollars in the resort real estate market in Vietnam.

As a segment with many legal problems as well as congestion in investment resources, resort real estate needs to promote policy and capital support to speed up recovery in the near future.

The optimistic point is that the market is receiving some positive signals such as tourist apartment products preparing to be offered for sale again in response to the information that they are about to be issued "books" according to Decree 10/2023/ND-CP. In addition, according to the Ministry of Culture - Sports - Tourism, the target for welcoming international visitors will increase from 8 million to 13 million visitors in 2023, an increase of about 156% compared to the plan set at the beginning of the year. On the other hand, in the wave of public investment taking place across the country, tourism and resort real estate will be a potential segment when the connection infrastructure between regions is increasingly improving, shortening travel time. to tourist and resort destinations with the expectation that the Vietnamese tourism market will recover strongly.

Resort real estate in Phan Thiet. Photo: TL

Returning to the Ixora Ho Tram by Fusion project, experts assess the fact that new projects of good quality are still being brought to the market, although not many, and foreign investors still want to expand their network in Vietnam. Vietnam. “This shows the long-term potential of this market in the long term. This is also a good sign for Vietnam's resort real estate market," said Ms. Duong Thuy Dung, Managing Director of CBRE Vietnam.