Real estate projects across Vietnam’s hospitality industry have placed their sale plans on ice in a wait-and-see attitude during this year’s first quarter due to low trading volume.
The sector witnessed an absorption rate of just 7% in the first three months, according to a market report by the Real Estate Brokers Association (VARS) in Vietnam.
In the period, only 20 hospitality property projects opened for sale with 826 products, mostly on Phu Quoc Island, one of Vietnam’s most popular tourist destinations. Just 58 of these products were traded, down 98% year-on-year.
The supply dropped 80% from a year earlier. Many hospitality projects did not join sales activities due to low liquidity, and almost no condotel units were traded.
In Q1/2022, more than 5,200 products were supplied, with more than 3,750 traded. The second quarter saw 6,000 products supplied and almost 4,500 traded. Last year’s Q3 started to see some decline - 4,500 products supplied and about 2,250 sold. Drastic drops were recorded in the last quarter - just over 2,200 products supplied and about 750 traded.
In terms of price, in Q1/2023, project developers quoted prices higher than those in Q4/2022 and equal to the levels prior to the last quarter. They kept providing sales support measures like profit sharing incentives and support in interest rates, while some offered a discount of up to 40%.
According to the VARS, a rebound in Vietnam’s hospitality property industry would not come rapidly, while the sector relies on solving legal issues, cashflow among developers, and growth in the Vietnamese hospitality industry.
In Q2/2023, hospitality property supply is predicted to decrease because developers are facing financial problems. If measures to solve legal obstacles work well and fast, positive signals would soon appear.
Data collected by The Investor shows that in Q1/2023, transactions at resort projects of major developers like NovaLand, Hung Thinh, Nam Group, and Charm Group stood at low levels. There were people showing some interest and taking a look at projects, but few deals were made.
Canal District inside the huge project of Merryland Quy Nhon in Quy Nhon town, the south-central province of Binh Dinh is on sale with bizhouse and townhouse units. Hung Thinh Group, the project developer, is offering a 17% discount, and buyers that pay 10-50% of the total price will get an annual interest rate of 24%; and the rate becomes 20% if buyers pay 55-95% of the total price.
"Currently, the sales volume is low, about one or two products traded a week,” a broker called Cham Anh said, adding that the developer is about to start selling condotel products with prices starting from VND2.2 billion ($93,800) per unit.
The sales manager of a Ho Chi Minh City-based real estate developer told The Investor that in Q1, a resort of the company in Ba Ria-Vung Tau province had almost no transactions. The firm’s sales staff just relied on its previously-introduced units.
The source added many developers are facing cashflow problems while customers adopt a wait-and-see attitude, with developers eager for credit policies provided by regulators.
Dull statistics
A market report by property consulting firm DKRA Group shows that the villa segment saw two projects offering sales in their next phase in Q1, with a consumption rate of 21%. Just 42 units were from new supply, down 96% year-on-year, and only nine units were bought, down 98%. This new supply came from the northern province of Hoa Binh.
For resort shophouses, Q1 saw two projects open for sale in their next phases, with a consumption rate of 57%. Total new supply was 21 units, down 99% over the same period last year, while new consumption reached 12 units, down 99%. These new supply sources were from Binh Thuan province in south-central Vietnam and Kien Giang in the south.
As for condotels, the market had two projects for sale in Q1 - one being a completely new project and the other with sales for its next phase. The combined consumption rate was only 3%. The new supply had 198 units, down 69% year-on-year, and just six units were traded, down 97%. Localities with new supply were Quang Ninh in the north and Binh Dinh on the south-central coast.
DKRA forecast that in Q2, the supply of condotels is expected to increase compared to Q1, to about 300-350 units, mainly in Ba Ria-Vung Tau, Binh Dinh and Quang Ninh. Supply of resort villas may increase slightly, from 100-150 units, mainly in Kien Giang, while supply of resort shophouses ranges from 150-200 units, mainly in the same province.