City's property market seeing some prices double and talk of a bubble appearing.
Da Nang’s property market has been experiencing sharp increases in prices of late. According to Ms. Huynh Thi Thanh Thao, Deputy Director of Thien Kim Real Estate Trading Floor, in the first six months prices in the city center have risen by 30 per cent and as much as 100 per cent in coastal areas.
“There is a lot of land near the coast where prices have doubled, from VND25 million ($1,125) per sq m to more than VND52.5 million ($2,362),” she said.
Regarding the risk of a “bubble” appearing, Mr. Nguyen Dieu, Director of the Da Nang Department of Natural Resources and Environment, warned that land plots along the coast, from Son Tra Peninsula down to Hoi An ancient town, have been snapped up by foreigners.
Some coastal projects are being licensed under Vietnamese names but have foreign money behind them, he said, and this is why prices have increased suddenly this year and may result in a bubble.
Ms. Thao, however, said a bubble is unlikely because the renewed vibrancy in the city’s property market is due to many factors. “Seventy per cent of our customers are from Hanoi,” she said. “Most buy land to build apartments, hotels, restaurants or spas. In previous years investors weren’t interested in land, instead sending their funds elsewhere. This year they have returned to purchase land, which is in line with the general trend in the real estate market.”
Some experts say that because land prices in Da Nang are still cheaper than in Hanoi and Ho Chi Minh City there remain many vacant lots with high profitability.
Da Nang is to host a number of major events shortly, such as the Asian Beach Games 2016 and APEC 2017. These will attract many guests, experts, and foreign tourists to the city and demand for resort rooms and apartments for rent will increase at that time.
The logistics industry in Da Nang is also growing very strongly, with demand for purchasing or leasing cargo warehousing on the increase, especially plots with areas of 1 or 2 ha.
Mr. Tran Van Binh, Head of Business at the Sunland Real Estate Co., said that land prices are increasing significantly because Da Nang is on the rise as a whole and its land prices remain quite cheap, which attracts investors.
Property businesses believe that despite the strong growth Da Nang’s real estate will not experience a bubble because of the strict management the local government exerts over land transactions.