The Vietnamese resort real estate market has remained on a downward trend despite the fact the tourism industry reopened in March 2022, according to real estate consultancy DKRA Vietnam.
The market’s liquidity hit a 10-year low in the first two months of this year, the firm said in a report.
In the condotel segment, there was no new supply for sale. In October 2022, the market had 554 units on offer but only 89 were sold. The respective figures were 589 and 341 in November, and 131 and 54 in December.
For resort villas, DKRA data showed that in the two-month period, only one project offered three units in its next phase for sale, down 99.2% year-on-year, with only one successful transaction. Meanwhile, in the fourth quarter of 2022, there were 730 units for sale, with 147 sold.
According to the consultancy, supply and demand fell sharply over the same period last year. The market "hibernated" when a series of projects closed or delayed sales. Trading volume hit the lowest in the past 10 years. Both primary and new projects saw stagnant sales.
The primary selling prices did not change much compared to the previous months, but investors still applied policies like interest rate support and principal payment grace to support customers.
Supply and demand are expected to increase slightly in March, mainly in the northern coastal province of Quang Ninh.
Meanwhile, the shophouse market saw only two projects offer six units in the next phase, down 99.6% year-on-year, and no transactions were recorded. In the fourth quarter of 2022, there were 502 units offered for sale and 110 sold.
Supply in this segment plunged to the lowest level so far. Amid the difficult situation as well as the economic and geopolitical uncertainties, investors rescheduled sales, resulting in limited supply. Some offered discounts of up to 40% to stimulate market demand.
Supply and demand are forecast to rise slightly this month, mainly from projects with complete legality and developed by investors with strong financial potential.
DKRA said that the market was almost "frozen" after positive recovery signals in early 2022. Under pressure of inflation, interest rates as well as credit congestion, many investors have become cautious of putting products on the market.
Copying existing products
According to director of Savills Hotels APAC Mauro Gasparotti, before Covid-19, international arrivals to Vietnam grew impressively with an annual rate of 16.9% in the 2009-2019 period. From 2017-2019, about 10,000 mid- and high-end hotel rooms were put into operation each year on average, spurring the development of resort projects.
However, the pandemic dealt a heavy blow to the growth momentum of the resort real estate market. With large supply of existing and future rooms, Vietnam's tourism industry needs an annual demand growth of 20-30%.
Gasparotti said that the Vietnamese resort property market does not have diverse accommodation and tourism products, and needs to upgrade the quality of services. Many investors have not paid much attention to choosing models meeting the trends, but simply copied existing products.
However, there are still many opportunities for investors to grasp the trends and needs of tourists, he noted. New models meeting the needs of young domestic and international holidaymakers such as poshtel - a unique, affordable, and luxurious accommodation, or resorts featuring entertainment facilities, hotels with selected services, and co-living and co-working spaces. At the same time, the market has enough potential to develop luxury projects in city centers as well as resorts, with a limited number of branded real estate, he added.
As demand for resort products that focus on healthcare is increasing, such as resorts with yoga, therapy, and areas for senior living, wellness resorts and high-class eco-resorts in the vicinity of major cities should be taken into account.
Regarding current project investment and development, the Savills expert noted that despite challenging capital access, many foreign funds and investors are seeking suitable investment products in Vietnam.
The development of villas and condotels is a good way to access capital, but this process needs to be carefully prepared to bring value to investors, owners and guests, Gasparotti said, emphasizing that investors should focus on the project quality instead of scale, thus increasing project value over time.