Healthy sales are being seen at high-end second home projects all around Vietnam.
The second home market of holiday villas and condominiums has attracted many investors as the overall property market begins to show strong signs of recovery. Unlike others, the second home market is very much limited to those who can afford to spend hundreds of thousands or even millions of dollars on a villa or condominium in popular tourist spots around Vietnam. These properties are not just a holiday home for occasional use but also an investment capable of generating annual rent returns for owners.
Confident new launches
According to Ms. Do Thu Hang, Head of Research & Consultancy at Savills Vietnam, the country holds many advantages for investors to develop profitable second home projects. “Vietnam has many heritage sites, a natural coastline and beautiful scenery,” she said. “The country’s tourism industry is also growing, with more foreign tourists arriving every year. Unlike hotels and resorts, most second home projects are located by the seaside or among mountains.”
As sales improve and confidence among buyers increases, real estate developers have also become more confident when launching new products. In October, Savills and VinaLiving, VinaCapital’s real estate brand, launched The Point - a golf and villa development at the Danang Beach Resort. The project consists of 40 villas, 20 of which will be offered for sale in the first phase at VND4.8 billion each. The central coastal city of Da Nang is now a popular destination for tourism property developers as its second home segment has enjoyed positive feedback. Villas and condominiums valued in the several hundreds of thousands or millions of dollars have attracted impressive numbers of investors and buyers.
However, several tourism property projects are gearing up to take a piece of the rather narrow market. Industry insiders say that Da Nang may see diminished demand due to strong supply and the rise of other locations around the country. Many large-scale projects have been established, from the north all the way down to Phu Quoc Island, an area sometimes referred to as the “second home paradise”.
In September, the Syrena Vietnam Development and Joint Stock Company, a member of the BIM Group, announced its latest project, Little Vietnam - a tourist and commercial area located in the Halong Marina township in the northern province of Quang Ninh. Built on 3.3 hectares, Little Vietnam combines business and living areas in a township setting. Streets are themed and organized by business type, to create a common community. In the first stage of the project the townhouses have been built in the style of traditional houses in Hanoi’s Old Quarter and the ancient town of Hoi An. The project’s 109 townhouses include 80 themed “Little Hanoi” and 29 “Little Hoi An”.
The FLC Group Joint Stock Company, meanwhile, has recently invested around $261 million to build a resort and golf course in north-central Thanh Hoa province, which is planned to open in May next year. Once finished the 400-hectare complex will include an 18-hole golf course and a high-end hotel and resort, together with 670 villas and 152 semi-detached houses for sale.
Vingroup also launched its Vinpearl Resort Phu Quoc in November, on Long Beach; the second five-star hotel on the island after the Salinda Premium Resort and Spa opened in mid-August. The Vinpearl Resort covers 300 hectares and will include a five-star hotel, villas, an entertainment center, and a 27-hole golf course.
Locations in the north are also attracting second home investors, such as Ba Vi and Vinh Phuc. However, one of the most prominent projects in the region is Flamingo Dai Lai Resort, as many villas were sold soon after launch.
A month after Flamingo Dai Lai Resort introduced its Hoang Quyen villas in September, 60 per cent had been sold. Ms Le Thi Van Anh, General Director of the Hong Hac Dai Lai JSC, the investor of Flamingo Dai Lai Resort, told VET that its location, good services and clean and green environment were behind the strong sales. “We also guaranteed our buyers that they would receive their villas at the time committed to, which was an important part of their purchasing decision,” she added.
Flamingo Dai Lai Resort launched other villas in the first and second quarters and many have been sold, including the Bach Thanh, Do Quyen, Hoang Anh and Hoang Tuoc villas. Ninety-five per cent of Flamingo’s medium-class villas were sold within three months of launch. In the first half of 2014 its villa sales reached 80 per cent of the annual plan and increased 200 per cent against the first half of 2013.
Mr. Ken Atkinson, Executive Chairman of Grant Thornton Vietnam, said that Vietnam has been catering to an increasing number of domestic and international tourists, so in the long term the real estate market in general and the second home segment in particular hold great potential for development.
At the end of the third quarter the evaluation of real estate experts was that the local market is recovering, with increases in sales and prices in both Hanoi and Ho Chi Minh City and the second home market garnering greater interest. “It is clear to see that the second home market is always at the top of the high-price segments,” said Ms Anh. “Developers in the second home market are investors who see huge potential in the market and have plans for sustainable development. Compared to the same period last year, demand among customers for a second home has increased, but only well-invested projects with strong financial capacity see high levels of interest. In 2015, Flamingo Dai Lai Resort will open a golf course that will be the most beautiful in Vietnam, as well as a four-season swimming pool and other facilities such as bars and restaurants, which will catch the eye of even more buyers.”
Looking ahead, further improvements in both price and sales are expected given the current positive picture and support from expected lower lending rates, more targeted products, and improving economic conditions.
The Ministry of Construction and the Economics Committee of the National Assembly have examined the draft Amended Law on Real Estate Business and added content in order to open the door to foreigners to invest in the local real estate market. With such news, Vietnam’s second home market seems sure to become even more vibrant.