Vietnam seaside tourism

Vietnam’s seaside real estate market holds great potential for strong growth thanks to the development of the tourism industry, impressive economic growth, and the efforts of Vietnam in improving infrastructures.

The country has macroeconomic indicators favoring development growth; infrastructure improvements, especially with Phu Quoc and Van Don connected to the national grid; airport upgrades, relaxation of visa requirements, and the rise of the middle class which is becoming the main momentum for growth in the domestic tourism market.

“In addition, Vietnam has a lot of market opportunities, especially when new developers want a piece of the “cake”. The biggest developers are also working directly with the Government to expedite large infrastructure projects, such as metro lines in Ha Noi and HCM City,” Han Manh Tien, chairman of Vietnam Association of Corporate Directors said.

There were nearly 13 million international tourist arrivals last year, 29 percent higher than 2016 with a five-year compounded annual growth rate (CAGR) of 14 percent per annum.

The highest number of visitors was from China and South Korea with the amount growing.

The number of domestic tourist arrivals in Vietnam last year was 73.2 million people, 18 percent higher than in 2016, with a five-year CAGR of 16 percent per annum.

Those factors would greatly contribute to the development of Vietnam seaside real estate, especially in young Vietnamese markets like Nha Trang, Da Nang, and Phu Quoc beach resort markets.

Vietnam tourism must also face a number of challenges as overdevelopment is damaging Vietnam’s pristine beaches.

Low-quality resort developments have started to flood the market. Good short-term results do not mean long-term success; therefore, developers need to continually adapt to avoid an outdated resort and create a timeless property.

While Thailand is a giant tourist hub in the region, seaside tourism here still has much room for development. Vietnam is estimated to attract the most significant amount of cross-border investment for the next 12 months among APEC economies.

By 2020, the room stock of hotels, condotels and villas was expected to sharply increase by half to more than 34,000 rooms as in Nha Trang, and even double in Phu Quoc and Da Nang.

The hotel segment has shown excellent performance with the occupancy rate all above 60 percent for four-star and five-star hotels. Resort products, including condotels and villas, also experience a high absorption rate of above 90 percent.

It is estimated that by 2035, half of the Vietnamese population will be middle class, who are both potential investors and major customers for the tourism industry.

However, Dung also warns investors about chronic problems of the market. The legality of condotels still lacks consensus, and investors have to cope with such investment risks as profit commitments.

Environmental issues are also hard to ignore. Vietnam’s tourism industry heavily depends on natural landscapes and elements, so environmental degradation like the garbage mountains in Phu Quoc or coastal erosion in Da Nang may put a grim future on these famous destinations.

On September 25th, 2018, international financial institutions and representatives of worldwide development agencies will meet for the Vietnam Economic Infrastructure Development Forum to discuss upcoming business opportunities in Vietnam.

Original source: VIR
Published on 6 August 2018