WITH MANY HURDLES BEHIND, EXPERTS RECOGNIZE A NEW CYCLE EMERGING IN DA NANG’S RESORT REAL ESTATE

Often regarded as the “leader” of the Central Vietnam resort real estate market, Da Nang has always been a focal point for many investors. With the condotel segment, there are high expectations for a “rebirth” in the new development cycle of the real estate market, but will it become a reality?

Opportunities for Da Nang Condotels: An Insider’s Perspective

Recently, at the “Da Nang – Unleashing Potential, Elevating to International Standards” seminar co-organized by Viet Capital Real Estate (VCRE), Nobu Danang, and CBRE, Mr. Trinh Tuan Bao, a representative from Da Nang’s Department of Tourism, noted that tourism has been a prominent highlight of Da Nang’s economic development over the past six years.

In addition to focusing on human resources, land, and urban infrastructure, the business environment is also a key driver for elevating Da Nang’s position. “Da Nang is confident in its high-quality tourism infrastructure, which strongly attracts leading global hotel brands,” he emphasized.

Echoing this sentiment, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), stated that Da Nang’s tourism is prioritizing the high-end segment, with several international brands already establishing a presence in the city. Therefore, there is still significant growth potential when comparing Da Nang to more established markets like Phuket, Thailand.

Currently, branded apartments in Phuket are priced at an average of 200,000 THB (approximately $6,100) per square meter. Meanwhile, in Da Nang, internationally branded apartments are priced at just over $4,000 per square meter, excluding promotional incentives from developers.

Having faced numerous challenges, experts now predict a new cycle for Da Nang’s resort real estate. There are many promising signs of the market’s recovery in the near future.

Mr. Dinh noted that Da Nang’s real estate prices have remained stable over the past 3-4 years. In the context of the National Assembly approving special development policies for Da Nang, with three important real estate laws taking effect from August 1, 2024, and tourism stimulus programs, there is ample opportunity for both price and supply growth in Da Nang’s resort market.

Mr. Dinh analyzed that the success story of Phuket, which transitioned from a tourism-dependent economy to a branded real estate powerhouse, serves as a valuable case study for Da Nang in the next phase. “Currently, the central land bank in Da Nang is gradually depleting, which will create favorable conditions for price increases in the long term,” he emphasized.

According to economic expert Dr. Can Van Luc, the most positive change in the resort real estate sector, particularly in Da Nang, is the improvement in legal frameworks and the issuance of certificates through clear and transparent guidelines.

Specifically, Government Decree No. 10 of 2023 allows for the issuance of land use rights certificates for condotels, officetels, and tourism villas developed on commercial and service land. Accordingly, condotels are expected to open a new chapter of development. This type not only satisfies the lifestyle needs of clients but also provides a stable income from the growing demand for resort accommodations.

A representative of VCRE, a company collaborating with Nobu Hospitality on a branded real estate project along My Khe Beach, stated that the value of condotels is affirmed when they become investment solutions within a comprehensive experience complex, integrating amenities and multifunctional services to elevate the overall experience.

The representative also pointed out that the limited number of units is a strategic solution by developers to maximize profit margins, as well as to increase and maintain long-term value. In reality, when there is an oversupply of units, rental capacity, capital gains, and liquidity all face challenges.

In the current context, the question of “What opportunities remain for Da Nang’s condotels?” is being posed by many investors. According to experts, because condotels lean towards cash flow investment, they are inherently a trend-driven asset that requires a long-term vision. Many believe that once the final legal hurdle regarding ownership certification is cleared, condotels will have the opportunity to return to the market. In fact, with a 10-20 year outlook, the value of condotels could become a different story in the portfolios of investors.

Many supporting factors are in place, but challenges remain.

The first supporting factor is tourism. According to the General Statistics Office, in the first six months of 2024, Da Nang’s accommodation establishments served 5.1 million visitors, up 25.6% year-on-year. Of this, international visitors reached 2 million, up 40.3%; domestic visitors reached 3.1 million, up 17.7%. Revenue from food and beverage services and accommodation reached nearly 13 trillion VND, up 22.2%; retail revenue reached over 37 trillion VND, up 14.6%…

As tourism recovers, the resort real estate market is expected to see positive changes in the near future.

The second supporting factor is the recent approval by the National Assembly of a resolution piloting several special mechanisms and policies for Da Nang’s development. Accordingly, the Prime Minister will decide on the establishment, adjustment, and expansion of the Da Nang Free Trade Zone.

At the meeting on August 25, Da Nang’s People’s Committee announced that on August 31, the city will hold a conference to implement National Assembly Resolution No. 136 on the organization of urban governance and the pilot of some special mechanisms and policies for the city’s development, with the participation of about 500 central and local delegates, diplomatic missions, and businesses.

Among the key focus areas are investment in infrastructure and functional areas within the Da Nang Free Trade Zone; investment in inland waterway tourism with a capital scale of 8 trillion VND or more; investment in the overall project of Lien Chieu port with a capital scale of 45 trillion VND or more…

However, in terms of resort real estate, Da Nang will need more time to regain its upward momentum. Although Da Nang’s tourism sector is showing signs of recovery, the issues of project violations, delayed construction, and the erosion of investor confidence following the CocoBay commitment have affected market liquidity over the past period.

In the long term, Da Nang’s resort real estate has potential for development, but in the short term, it is unlikely to see a significant breakthrough in demand. In the journey of the real estate market, the resort segment will need to exert more effort to keep pace with the new cycle.