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The next hotspots for second-home development

Thứ Hai, 18/11/2019 - 07:00

As Danang and Nha Trang has experienced a slowdown in second-home supplies, non-traditional markets such as Binh Thuan and Ba Ria-Vung Tau are emerging as next hotspots.

A second-home development in Hoa Bình province.

Second-home market in notable tourist cities has experienced significant slowdown in terms of new supply since 2018, the recent CBRE Hospitality Forum heard.

In particular, accumulated supply of villa in three key areas, Danang, Khanh Hoa and Phu Quoc, recorded average annual growth of only 2.6 per cent, 0.9 per cent and 7.3 per cent respectively in the period of 2017 - 2019, as compared to average annual growth of 5.5 per cent, 35 per cent and 27 per cent respectively in the period of 2015-2017.

New supply of condotel also fell sharply after 2017. for instance, supply in Khanh Hoa province only grew at average rate of 7 per cent per year in the past two years, as compared to average rate of 239 per cent per year in the previous two years.

According to Nguyen Trong Thuc, senior manager of CBRE Hotels Vietnam, this slowdown in new supply is necessary for the market to adjust itself after a period of overheating, especially in the context that legal framework for second-home products needs improvement to keep pace with latest developments.

Robert McIntosh, executive director of CBRE Hotels Asia Pacific added: "To carry growth forward, hospitality real estate developers in Vietnam will have to go through market diversification, paying attention to potential non-traditional areas such as Nam Hoi An, Binh Thuan, Ba Ria-Vung Tau, as well as diversifying their product offerings and bringing in the professionals to manage their properties.”

Robert McIntosh, executive director of CBRE Hotels Asia Pacific, speaks at CBRE Hospitality Forum 2019 held in Hanoi.

The limited new supply in traditional markets goes in parallel with an expansion to new frontiers in 2019, especially to provinces boasting convenient linkages to major cities such as Ba Ria-Vung Tau (close to Ho Chi Minh City), Quang Nam (close to Danang), Binh Thuan (4.5 hours driving from Ho Chi Minh City), Ha Long (2.5 hours driving from Hanoi, with much enhanced connectivity thanks to by Hanoi – Haiphong – Ha Long Expressway).

Recent notable vacation property projects include Royal Park FLC Ha Long, Malibu Hoi An, NovaHills Mui Ne and NovaWorld Ho Tram.

Beside expanding into non-traditional markets, developers are also active in creating new hospitality products for sales, most notable of which are coastal shophouse/shopvilla in Phu Quoc and Ha Long.

By the end of the third quarter of 2019, each of these two markets has roughly 2,000 units of coastal shophouse/shopvilla that have been launched, with sold rate of about 90 per cent.

Current developers of these products are mainly top-tier developers on the market, which helped with the absorption of existing launched supply.

Shophouse/shopvilla can be used for various purposes such as retail, mini-hotel, and as such has attracted many individual investors who had some prior experiences in operating hotels/restaurants.

Another notable trend in hospitality that CBRE has witnessed recently is the growing interest in developing wellness resorts.

Although this format is very popular in the region, it is still relatively new in Vietnam and growth opportunities remain abundant, given the fact that middle-class population of Vietnam is expected to witness the fastest growth in Southeast Asia over the next five years, and tourists from North Asia are increasingly looking for tourism products that can incorporate wellness treatments.

Looking forward, CBRE expects Vietnam continues to be a key target in the expansion plan of many professional hotel operators. Not only well-known international hoteliers such as Accor, Marriott, Best Western, but also Vietnam-originated ones such as Lodgis, Sailing Club, Silk Path and Wink are very active in looking for new projects to gain more market share.

Attendees and panelists at CBRE Hospitality Forum 2019 concurred on a positive outlook for Vietnam hospitality real estate market, as the country is getting closer to the well-established tourism markets in ASEAN such as Thailand, Malaysia, Singapore and Indonesia. 

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