Emerging Real Estate Market in Central of Vietnam

 

As the economic, cultural and commercial centre of central Vietnam, Danang has always been seen as a focal point in the national map. The real estate market in this city in the third quarter has had notable changes in all market segments including villas and apartments for sale, hotel and resort, office for lease and retail. Among which, the villas and apartments for sale, the best-known segment, had the most interesting performance in 2009.  

In the villa’s market, there were about 387 villas for sale in Quarter 3 of 2009 from six active selling projects. The current villa market is mainly focused in Ngu Hanh Son and Son Tra districts, in which Ngu Hanh Son District accounts for 80 percent of the total market area.

 

In the apartment market, there were three projects available for sale including Blooming Tower, Olalani and Hyatt Regency Danang. Savills has been appointed as the exclusive sales agent for two of the three projects.

 

Even though Danang’s villa for sale market is still at the very early stage of development, the market showed a certain excitement in Quarter 2 of 2009 and continued into Quarter 3 of 2009. Out of the five projects in the current supply, the two new villa projects had outstanding performances: Hyatt Regency Danang and Ocean Villas. In general, Danang’s apartment for sale market in Quarter 3, 2009 did not perform as well as in Quarter 2, 2009.

 

The reason that Danang is the target of tourism property development is because it has one of the six most beautiful beaches in the world according to US-based Forbes Magazine and it is surrounded by three world heritage sites including Hue, Hoi An and My Son Holy City. The villa for sale market and tourism property assets is a narrow segment as it is designed for only wealthy buyers. This market has developed due to the spreading of a popular concept among some wealthy Vietnamese to have a “second home/ vacation home”. The thing that makes the second home market attractive to buyers is that it goes beyond vacation accommodations. A second home can also generate benefits for the owner during idle periods and that is an important factor promoted by developers.

 

Danang is located in the cultural and historical centre of central Vietnam with many attractions within easy reach including Hoi An, My Son holy land and Hue City. There are about twenty-three 3-star or higher hotels and resorts in Danang City. These hotels and resorts provide approximately 1,733 rooms. In general, the Danang hotel and resort market has a plentiful supply of small hotels, but there is currently a lack in the supply of luxury hotels (four or five-star hotels). Hotels and resorts in Danang are mainly located along two sides of Han River or Son Tra – Dien Ngoc Street. The majority of hotels in Danang are currently located in Hai Chau District, which is the administrative, commercial and service centre of Danang City.

 

According to Danang General Statistic Office, in the first nine months of 2009, Danang City attracted 1,034,000 people, about 80 percent of the 2009 target, which was an increase of about five percent compared to the same period of 2008.

The years 2010 and 2011 are estimated to have the largest supply compared to 2012 and the remaining months of 2009.

In Quarter 3 of 2009, there were 19 office buildings with a total area of about 62,600 square metres. Office supply in Danang is mainly occupied by various types of company headquarters such as banks or construction companies.

 

Presently, a large number of office buildings are located within Hai Chau District. This district accounted for almost 77 percent of the total office leaseable area in Q3 2009. The remainder of the office supply is mainly distributed in Thanh Khe District.

 

Presently, Danang office space demand may come from foreign invested companies, banks and a small number of local companies. Vietnamese companies in Danang have only considered modern office buildings in a limited number of cases. It is easily seen that it is a tenant’s market due to there being very little new demand in the office market and existing office buildings still have vacant space. Some type of promotion such as rent discount or added value should be considered by property owners in order to increase occupancy.

 

Savills anticipates that nearly 143,000 square metres of office for lease will likely enter the Danang market in the next five years. Around two-thirds of the office space entering the Danang market will be situated in Hai Chau District, trailed by Son Tra and Thanh Khe districts and about half of those projects are under construction.

 

Among the 10 major retail developments surveyed in Danang, Hai Chau District ranks number one, with 53 percent of the total current supply. Cam Le District follows Hai Chau with a market share of about 30 percent. Thanh Khe District has a market share of about 17 percent.