Just one resort villa project with 40 units was introduced to the Vietnamese market in July and only one unit of this was sold, according to Vietnamese property consultancy DKRA.
This marked an 88% and 99% drop in supply and consumption over the same period last year, respectively, the DKRA said in its latest market report.
It noted that supply in this segment began to decline at the end of last year’s second quarter without showing signs of recovery. In July, primary selling prices did not change much compared to June; and many developers were offering interest rate incentives and 40-50% discounts for rapid payment to deal with low demand.
"Legal issues, interest rates and slow recovery of the tourism sector are other reasons behind the hospitality real estate segment’s dullness,” DKRA said.
“The market might be a little better in August with slightly increased demand expected.”
In the hospitality townhouse segment, July saw two existing projects offer 95 units, much higher than in March, April, May and June. However, only one unit was bought.
The condotel segment seemed to do a little better with three projects (two new projects and one existing project) putting up a total of 405 units for sale. Of these, 113 were sold at only one project; the two others saw none traded.
Vo Hong Thang, DKRA’s R&D deputy director, said that condotel units that serve residential purposes were likely to recover before the other segments – resort villas and townhouses.
"It would take at least three more years for hospitality real estate to reach some balance. After that, some positive signals may be seen,” he said.
“As for assets on the seashore, a continued decline is predicted for the last six months of this year.”
Hospitality real estate inventory stood at a very high level, the report said, adding that as of end-June, it comprised 42,300 condotels and 15,000 beach villas.
Tran Thuy Van, manager, market research and development services, CBRE Vietnam, said the sector would not see business return in the last six months because developers were restructuring their businesses.
Another problem faced by developers was the pressure of corporate bond maturity in the year-end period, she said. Very few developers have plans to resume sales in Danang city, Ba Ria-Vung Tau province and Phu Quoc Island, she added, without elaborating.
In the second quarter of 2023, high-end resort products priced at more than VND10 billion ($420,000), saw almost no transaction recorded, according to a Vietnam Real Estate Brokers Association (VARS) report.
VARS noted that sale incentives, including discounts of up to 25-40% failed to influence investors.