Property resorts meet big questions about the ability to fill and profit

25/04/2017   Viewed: 856
The real estate market is under pressure because the supply is higher than the rate of tourism development, while the owner may be at risk when it comes to attracting customers with profit commitments.

Savills Vietnam has announced real estate market report quarter I / 2017. In particular, the report spends a lot of time analyzing the segment of property development which is developing very strong recently. With the development of Vietnam tourism, this is still a segment that attracts both investors and buyers. However, many data show that, with tens of thousands of real estate marketed, the ability to fill and profit as expected is still a big question.

According to Troy Griffiths, deputy general director of Savills Vietnam, by the end of 2016, more than 5,000 apartments and condominium villas have been completed and launched and the number will increase more than four times. 3 more years. During the period 2017-2019, approximately 27,000-29,000 estate properties will be opened cumulatively each year.

In addition to Hanoi, Ho Chi Minh City, three key tourist destinations of Vietnam - Nha Trang, Da Nang and Phu Quoc - both have strong international visitor growth rates, especially when developing many international direct flights. each.

In Nha Trang, in the next three years, high-end hotel supplies in the mid-end and high-end segments will be around 29% per year, double the growth in visitor arrivals in 2013-2016. In Da Nang, supply for the next three years is expected to grow at an average of 30%. During the last 3 years, visitors to Da Nang has reached only 21%.

If still maintaining the above growth rate, the rate of exploiting 4-5 star hotel rooms and resort villas in these localities in the coming years will not be high and the competition will be fiercer.

Phu Quoc is also home to this situation but at a lower margin. However, as emerging markets, Phu Quoc is under pressure when future supply is concentrated in the high end segment. This also poses a challenge to the performance of the owner.
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The resort segment is expected to face many challenges in the next three years

Meanwhile, after the boom over the past two years, the resort segment recorded a significant decline in liquidity in the first quarter of 2017. According to the Vietnam Real Estate Association (VNREA), in the first three months of the year, the total supply of resort real estate market in Da Nang and Nha Trang reached nearly 5,300 units. However, the volume of successful deals was only more than a quarter and mostly the condotel.

The cause of the decline is because this is the low point of the year. Although it is predicted that in the second quarter, the transaction will increase again with thousands of units offered for sale, but VNREA also said that investors are quite cautious and often choose projects with management units. Professional operation. By the end of 2016, the number of international operating units in Vietnam has nearly doubled compared to 2010, not to mention the birth and development of the scale of some brands in the country.

In addition to the challenge of balancing supply-demand, developers should consider the profitability ratio. With apartment boom, resort villas, developers are now racing to commit to a profit of around 10% a year. This figure is higher than 7% in Phuket (Thailand) and Bali (Indonesia). Moreover, Vietnamese investors usually commit to profit for 5-10 years, 2-5 times higher than the 2-5 year level of countries in the region.

According to the research unit, if the profit commitment is applied, after about 3 years, the investors can reach break even point. However, they can hardly sustain and may incur losses if this lasts for 10 years.

The rapid development of tourism also requires the agency to manage the airport infrastructure adequately. According to data from the tourism industry, in 2016, more than 80% of the total number of international tourists travel by air, with about 8.2 million. Meanwhile, data from the transport sector showed that the airport in Nha Trang is overloaded 320% and Ho Chi Minh City is 130%. Although it has been upgraded in 2011 from 4.5 to 6 million passengers a year, Da Nang Airport is still over 113% loaded.

Therefore, efforts should be made by the regulator to deal with limited capacity at the airport in the coming years in order to exploit the potential of tourism and increase the rate of exploitation of resort properties.

Savills Vietnam said, "Infrastructure upgrading is a key factor in assessing the potential for tourism development, especially with the development of new supply increasing by 30% annually in the last 3 years in Da Nang. Nha Trang and Ho Chi Minh City ".

Prior to that, according to VNAT, in the past decade, international visitors to Vietnam tripled. Although this is quite impressive data, according to the research unit, this level is only half that of other famous destinations in the ASEAN region such as Thailand and Malaysia. This difference, along with the lower cost advantage over other destinations, shows that Vietnam has great potential for exploitation. In addition, in recent years, domestic tourism has also been growing double digits.
According to Vnexpress

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