Property buyers are becoming more and more cautious about developers’ promises of high returns, while developers themselves are also adopting caution before launching new products, according to Colliers’s report on the local real estate market in Q1-2019.
Even though the future of condotels is unclear, many investors clearly have persistent interest in the potential for future returns in this segment.
A condotel project on the bank of Han river in Da Nang.
The condotel supply in Da Nang is expected to continue to expand in the near future, causing a fiercer competition between condotel developers. New products will have to differentiate themselves by unique design and attractive sales policies to lure buyers.
In the Central coastal city, the average condotel absorption rate remained high at over 80 percent thanks to the trust investors seem to have in the potential of the market for long-term returns.
Specifically, condotels in Hai Chau district saw the highest absorption rate at almost 90 percent, followed by Son Tra district and Ngu Hanh Son District with 73 percent and 71 percent, respectively.
At the end of March, the average primary price hit $2,250 per sqm.
According to the report, demand for condotels mostly came from Northen investors, particularly those from Hanoi. They accounted for over 80 percent of the buyers in Da Nang condotel market.
The coastal city benefits from excellent transportation infrastructure, a sharp increase in the number of international flights and a stable rise in the number of tourists.
Meanwhile, the second home-villa supply is extremely limited in Da Nang with only 60 projects, all located in the two districts Son Tra and Ngu Hanh Son. Over 95 percent of second home-villas have been sold out.
The average asking price of these villas in Da Nang ranges from $1,100 per sqm to more than $2,200 per sqm.
According to Colliers, main drivers of success for Da Nang real estate are proximity to the beach, reputation of developers, and sales policies.
In the city more than 95 percent of second home-villas have been sold out.
With announcements about future supply not made, it is expected the current lack of supply will persist.
According to Savills report, in the second half of 2018 a total of 14 projects supplied condotels.
No new projects or phases have been launched.
Ngu Hanh Son District accounted for 52 percent of the condotel supply.
In the second half of last year the absorption rate increased by 9 percentage points due to limited primary supply.
Prices were 1,800-3,800 USD.
Starting this year 16 projects will be completed and come online.
In the second half of last year villas were supplied by 16 projects.
Ngu Hanh Son District was again the largest supplier with a 91 percent share from 13 projects.
In 2019 45 projects will be completed.
There were approximately 13,400 hotel rooms at the end of 2018.
This year 2,200 three- to five-star rooms will come online.
