Many companies pay attention to investment in tourism real estate in Vietnam thanks to great potential, Mr Tran Xuan Quang, General Director of Vinaconex Investment and Tourism Joint Stock Company (Vinaconex-ITC), which is carrying out theUS $1-billion Cai Gia-Cat Ba tourism urban area project said in an interview with the Vietnam Business Forum.
Which is the potential of investment in tourism real estate in Vietnam?
Previously, foreign investors poured investment in high-level building, trade centres and offices for rent but now they move to invest in tourism real estate sectors. So do local investors.
The trend is attributed to the fact that the average room price in Vietnam is between 20 percent and 50 percent higher than in regional countries including Thailand and China. Meanwhile, Vietnam’s hotel sector falls short of nearly 20,000 rooms at four and five-star grade. Investors expect to earn more when investing in these sectors in Vietnam that boast long beaches and the most beautiful bays in the world.
The Government of Vietnam has made new policies of investment decentralization, which grant more power and autonomies to provincial People’s Committees. As an investor, what do you think about these policies?
The government’s new policy creates more favourable conditions to investors including more simple administrative procedures and faster capital disbursement, which is expected to bring more economic values; thus, it receives investors’ consent.
The Cai Gia-Cat Ba tourism urban area project benefits from incentives by the government and local authorities including simple procedures, exemption from land use right fees and taxes. The project’s investor has to pay initial fees that are much smaller than the payments by other projects in Vietnam, which is the incentive by the Haiphong municipal government and Cat Hai island district to the project.
The national economy has just overcome the recession period. What do you think about capital risk dispersion when investing in these markets as most real tourism real estate projects need big investment?
Investors in these markets have more opportunities to mobilize capital as many investors are keen on these sectors. Investors in these sectors should have good financial competence but it takes them a long time to break even. Regarding our project, we not only sell villas to investors but also join hands with them to sell products for the project’s life span in order to bring about long-term profit to investors and ensure tax payments to the government.
Enterprises that invest in projects by themselves may face difficulties in capital mobilization. In our case, we received support from institutions with the best financial competence like banks and from our traditional partners.
Moreover, many investors in construction and real estate sectors benefit from the government’s demand stimulus package including corporate tax payment delays and soft loans, which helped ease their capital burden.
Almost all tourism real estate projects are located in southern Vietnam including Nha Trang and Danang cities, and Binh Thuan province. Why does such a big project select Cat Ba island district in the northern region as its location?
The project belongs to the economic development triangle as the Cat Ba Island is recognized as the World Natural Biosphere Reserve. Infrastructure in the island is still rudimentary, which has been the great advantage for pioneer investor there.
Particularly, the Cat Ba Island is expected to become an international ecotourism area; thus, the government of Vietnam is encouraging investment in infrastructure in Haiphong city and the island as well, including the expressway No. 5B, Dinh Vu Bridge, airport and port upgrading.
The project inherits advantages to develop tourism services. It will help build a high-end tourism area nearby the ancient Cat Ba town. We will speed up implementation of the project to make it a centre of tourism in the northern region.
Reported by Huong Ly
Vietnamese
