Resort real estate continues to struggle in 2024: insiders

Resort real estate in Vietnam is unlikely to recover like other segments in 2024 and return to its golden age of 2017-2020, according to senior expert Nguyen Hoang.

"Hosptality property is only for people with extra money and is not a segment that attracts investment easily. For some projects with certain favorable conditions and advantages, there are exceptions, but it would be very difficult for the segment to return to its golden age of 2017-2020," said Hoang, former director of R&D at DKRA Vietnam.

According to the Vietnam Association of Realtors (VARS), the recovery of resort real estate still faces many difficulties due to legal issues, cumbersome administrative procedures and limited cash flow.

A series of large projects are facing legal problems so they cannot offer products for sale, it said, adding that prices remain high while inventories include mainly high-end and high-value products which must compete directly with loss-making products from secondary investors.

In addition, customer confidence has not yet returned, the association noted, explaining that investors are still turning their back on resort real estate due to legal concerns and a gloomy profit-taking outlook.

Nguyen Chi Thanh, VARS permanent vice chairman, commented that this year's resort real estate still faces huge difficulties and challenges. To recover, in addition to solutions to remove legal bottlenecks, the government needs to consider mechanisms and policies to synchronously develop related industries and fields such as tourism and services, he suggested.

Consultancy firm DKRA’s 2023 realty market report showed that the resort real estate segment recorded a sharp decrease in supply and consumption compared to the same period in 2022.

For resort villas, the supply in the primary market saw 2,542 units from 67 projects in 2023, including three new ones, down 58% year-on-year. The absorption rate reached 21% (526 units), equal to only 13% of the 2022 figure.

Most of the supply came from the central region, accounting for 36% of total supply and 86% of total transactions in the entire primary market. The selling prices were unchanged over the same period in 2022 and continued to remain at high levels, ranging from VND6-155.7 billion ($244,150-6.34 million) per unit.

Sales policies such as profit commitment and sharing, interest rate support, principal grace periods, and incentives for quick payment to increase liquidity failed to prove effective as expected.

For resort shophouses, in the primary market, there were 3,271 units from 34 projects (two new ones), down 62% compared to 2022. Market demand plunged with only 366 units sold, equivalent to 6% of the previous year’s figure.

Most transactions were seen in projects with full legal status, developed by large investors and priced below VND10 billion ($407,000) each. However, the selling prices were still high, from VND15-40 billion ($610,400-1.63 million) per unit.

Meanwhile, the condotel market recorded 5,937 units opened for sale from 45 projects, including four new ones. The absorption ratio reached 20% (1,164 units). Market liquidity was low, with transactions mainly seen in projects with fully legal status and developed by investors with strong financial potential and priced under VND3 billion ($122,000) per unit.

Meanwhile, data from the Vietnam Association of Realtors (VARS) showed that in 2023, there were about 3,165 new resort real estate products released, down more than 80% from 2022. Many projects were delayed due to unfavorable market developments, and only 726 tourism and resort real estate products were successfully traded.