Vietnam - Sun beats down on glut of resorts

Resorts have only appeared on the local market in recent years, but supply is rapidly increasing. Following  a slowdown last year, the situation looks difficult for the sector in 2012.

According to VietRees, the resort market in Ba Ria-Vung Tau province remains in its embryonic stage. Investment during 2010-2011 levelled out and investors attributed the situation to the economic difficulties. Moreover, inefficient business performance at resorts and tourist sites in Phan Thiet city has contributed to the above phenomenon.

Some investors say it could take five more years for the resort market to fully recover and flourish in the region. Consequently, most projects have yet to be carried out and are limited to the registration phase with disbursed capital representing a low ratio to pledged capital.

However, VietRees believes the potential of the resort property market in Ba Ria-Vung Tau has yet to be fully realised and it has every necessary condition to further develop as Ba Ria-Vung Tau is among the provinces with the highest potential for development in Vietnam and is the leader in the southern key economic zone, especially in the tourism and resort segment for the following reasons.

The province is endowed with favourable natural conditions and rich and diverse tourism resources and is unrivalled in the south-eastern and south-western region. The infrastructure and connecting transport system have been developed quickly and improved constantly, creating favourable conditions for rapid growth.

Favourable incentives and investment promotion policies have attracted a lot of investment projects and social resources from all sectors, particularly into the tourism and property industry, including the tourism property sector. Human resources for the tourism industry will have increased robustly by 2015 in terms of quality and quantity.

Ba Ria-Vung Tau is very close to Ho Chi Minh City. The province is also close to the proposed Long Thanh international airport. This creates conditions for the sustainable development and recovery of the real estate market.

Over the past five years, it can be easily noticed that the scale of tourism property segment in the province has developed strongly. As of July 2011 the province was home to 148 tourism projects covering a total area of more than 3,900 hectares with a total registered capital of about VND35 trillion ($1.2 billion). Additionally, there are 39 tourism projects developed on forested land spanning over 3,200ha and with registered capital of more than VND10,600 billion ($500 million).

Tourism industry infrastructure is being expanded and its quality being improved. Local tourism businesses have strived to build and upgrade facilities to meet ever increasing demand. The entire province has 162 hotel establishments with 6,722 rooms and an estimated revenue of VND1,780 billion ($85 million). The province has attracted some 8.4 million visitors, 320,000 of which are international tourists.

It is inevitable that the growth of tourism property will fuel the development of resort property. Although resort property has not yet been developed, the market will really flourish in the next few years. Our research has also pointed out that those investors who have a high expectation of the local resort property market will see robust growth over the next three years.

The resort property market promises robust growth, especially in Xuyen Moc and Dat Do districts. Xuyen Moc district has a coastline stretching dozens of kilometres from Song Ray Bridge to Binh Chau commune. Besides the tourism development potential, Xuyen Moc district also holds the edge in developing eco-tourism with hot spas and pristine forests among the attractions.

Furthermore, Binh Chau site is currently the number one choice of tourism property investors since it is blessed with stunning landscapes and a natural reserve and hot springs. Then there is Tam Po Mountain, Ho Coc beach and cold spring. In addition, travellers have easy and fast access to Binh Thuan province from Binh Chau tourist site via the coastal road.

Many developers have realised the strategic location of Ba Ria-Vung Tau near Ho Chi Minh City and are exploring opportunities to set up resort projects. They have selected Xuyen Moc district as an ideal venue to launch potential projects.

The market’s bright spot is the Ho Tram Strip mega-project where construction is on schedule at a time when the real estate market remains stagnant with many projects stalled. In September 2011, Coteccons won the bid to build this project. The package, whose total bidding value for the first phase stands at $155 million, is expected to be come on stream by early 2013.

We rate the time-share resort property type as being in the early stage of development. These projects are mainly located in Vung Tau city, Xuyen Moc and Long Hai districts, as well as other sites specialised in resort property and on the beautiful beaches in Ba Ria-Vung Tau province.

Given time-share is a high-end tourism property type with high prices and given the current slump of the real estate market and macro-economic instability, the business progress of these projects is very slow for the time being.

With poor business results and an inactive property market as well as tightened monetary policy and the instability of domestic and global economy, the resort property market in Ba Ria-Vung Tau in the 2012-2013 period is predicted to continue facing multiple difficulties.

With similar supply from different kinds of property, time-share tends to go up nationwide. We realise that the consumption and sale of this kind of property will encounter difficulties at least over the next couple of years.

The market will only be able to pick up after 2013 when the domestic and global economies enter a new and more stable stage of development. This is because time-share property targets high-income earners and foreigners. It is forecast that the resort property market will only be able to grow to its full capacity over the next five years.

The development of infrastructure connecting Ho Chi Minh City with the province and the pick-up of Vietnam’s property market are necessary conditions for Ba Ria-Vung Tau’s tourism property development.

Ba Ria-Vung Tau and Phu Quoc island can be said to be the areas with the most potential for development in the south of Vietnam. Along with economic recovery will surely come the resurgence of tourism property.

All in all, the resort property market in Ba Ria-Vung Tau province is forecast to face a difficult 2012-2013 period. If there is any growth, this will be less than 5 per cent. In the 2014-2015 period, however, a growth rate of 7 to 8 per cent per annum is achievable.

Vu Quoc Thai

VIR

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