Tourism Real Estate – A New Game

A series of domestic and international investors are jumping into the tourism real estate, having brought in the field a new face. They have gradually created the demand of the rich and middle circles in Vietnam. 

 

Lots of resort investment projects are worth dozens of billion dollars. According to the CB Richard Ellis (CBRE) company’s assessment, within next two or three years, there will have around 970 villas and 565 luxury apartments in the north, 1,085 villas and 510 apartments in the central region and up to 5,100 villas in the southern region. 

In investor’s eyes, the southern region is still an ideal place for real estate projects. Many large-scaled projects combining between tourism and resort such as Sanctuary Ho Tram, Laguna Long Hai. Evason Hideaway Con Dao in Vung Tau city, Long Thanh Golf in Dong Nai province are invested with tens of billion dollars. The Sacomreal Company has ordered to sell the bottom land of Casalle’ Hills villa project in Binh Thuan province’s Ham Tan district at a price of VND3.5 million a square meters. In addition, the Minh Thanh trade and construction company, who is investor of the Mui Ne Domaine project, is ordering to sell 17 villas with area from 830 square meters to 2,945 square meters here at prices between US$524,000 to US$1 million each. Besides, other projects included Sanctuary Ho Tram with 70 villas, the Best Western Nha Trang with 240 apartments, the Con Dao-based Evason Hideaway report with 35 hotels and 16 villas and the Sea Links complex in Phan Thiet city’s Mui Ne.  

 

With its long and beautiful coastline, Da Nang city is luring many investors. Indochina Land, an affiliate on real estate investment of the Indochina Capital Financial Corp., are selling villas and apartments in its Hyatt Regency Da Nang Resort & Spa site at prices of US$200,000 a apartment and US$1.1 million a two-storey villas with a view over the sea. In August 2009, Vinacapital plans to sell 30 villas in its Ocean Villas project with an area of 275-433 square meters each at estimated price of US$320,000-US$625,000. The number of villas is on the project’s phase 1.     

 

Some other projects are about to be completed such as the Olalani Resort project including three areas of villas, 88 luxury apartments and a 160-room hotel; the Fusion Alya project in Quang Nam province’s Hoi An town with 19 swimming-pool villas, 11 coastal villas, 19 garret villas and 57 apartments. The selling price is at least US$95,000 each apartment and US$220,000-US$280,000 each villa.      

 

In the north, the tourism investment and development joint stock company (Vinaconex-ITC) has just completed the phase 1A of the Cai Gia-Cat Ba tourism urban area project on an area of ten hectares in Cat Hai district’s Cat Ba town, Haiphong city. Over 90 villa plots of the 170 hectare project has been registered. Vinaconex-ITC is urgently building infrastructures of the next phase in order to finish the entire infrastructure by 2012. 

Recently, the Song Da urban development and industrial zone joint stock company (Sudico) has broken ground on the construction of the first phase of Song Da-Ngoc Vung ecological tourism site. The project, covering an area of over 30 hectares in Ngoc Vung commune, Van Don District of Quang Ninh province, costs over VND264 million. The project include mini hotels, restaurant, entertainment place in combination with available tourism facilities in the area to take shape a tourism center meeting international standards under the Ha Long Bay tourism network.

 

According to Marc Townsend, executive director of CBRE, compared to other nations in the region, the resort market is still new in Vietnam because the status of the country’s tourism sector is less developed than those of regional countries. Compared to Indonesia’s Bali city twenty years ago, Vietnam has not yet caught up with it on infrastructures. However, this is an opportunity for investors. Not long ago, the market is considered to be for foreign investors who have economic potential. However, the market trend has changed promptly in recent years as many domestic investors started showing their interest in resort projects. It is clearly that investors have caught up with the new hobby of the rich and middle classes in Vietnam that they want to own luxury tourism real estates. 

 

Mr Micheal Piro, the selling and marketing director of Indochina Land Corp. analysed that the buyers of villas or apartments will stay here for vacations for one to three months. For the remainder of months, the company would manage these villas and apartments and could rent. The profit from renting will later be divided into halves. With the price level of US$300-US$400 per night per apartment and US$500 per night per villa and renting for around 70 days per year, owners could take back their capital after only seven years. During the seven-year period, they are still able to relax in their apartment or villa for from 7-21 months.       

 

Recently, Indochina Land under the Indochina Capital Corp. has ordered to sell 150 apartments and 30 three-storey villas in the Hyatt Regency Da Nang Resort & Spa at prices of US$180,000 per apartment and US$1.3 million per two-storey villa overlooking the sea. After one month, over 50 per cent of the above-mentioned apartments and villas have been owned. 

 

According to real estate experts, Southeast Asia region will be new tourism destination of the world in the future. In addition, they also assessed that many customers have changed their choice towards separated villas instead of hotels or resort sites.  

 

Although the transference or re-purchasing of tourism real estates is more difficult than common real estates because they are very selective about buyers, the tourism real estates’ profitable capacity is very high, which is significant to domestic investors.

In brief, buyers of tourism real estate must have lots of money and are willing to spend money recklessly because this kind of real estate is not easy to purchase cash on delivery like common apartments or urban bottom land plots. To own a coastal villa, investor must spend at least US$100,000 to millions of dollars and accept a long duration of approximately ten years to reclaim their capital. However, along with the economic growth, profits from the business of tourism real estate are believed to increase because they do not depreciate and almost all are located in ideal areas with many beautiful landscapes.