24,000 tourism and resort real estate products "deserted"
Recently, the real estate market has continuously received policies from the government to remove difficulties and obstacles.
Illustration photo. (Source: VNN)
Specifically, the Ministry of Construction's report for the first 6 months of 2023 shows that the tourism real estate segment is recovering positively, with 8 projects completed, bringing to the market 3,385 resort and office-accommodation products, an increase of over 133% compared to the fourth quarter of 2022.
The market has shown many positive signs, but there are still many difficulties facing businesses in the industry. Many investors have launched preferential policies and huge discounts, but the amount of goods sold is still insignificant.
The slump is occurring in most resort real estate segments across the country, pushing inventory to alarming levels over the past half decade.
DKRA Group's report shows that the cumulative condotel inventory by June has increased to 42,364 units. Of which, the total inventory of coastal townhouses has increased to approximately 30,000 products. For coastal villas alone, the cumulative inventory by the end of the second quarter of 2023 is up to 15,000 units in both the North and the South.
Large inventories pose a potential risk of oversupply crisis. The reason is partly due to investors' fear of economic recession, and partly due to the fact that the products already supplied to the market have not been used effectively.
The situation of products that have been handed over but left unused for many years has had an invisible negative impact on the resort real estate product line.
According to research by the Market Research Department - BHS Group (BHS R&D), from 2020 to present, the whole country has 81 resort real estate projects that have been and are in the process of handover, providing the market with more than 44,000 products, including both high-rise and low-rise.
Of which, 67/81 projects have been put into operation, equivalent to nearly 20,000 products.
Notably, only 31/67 projects are fully operational, the rest are partially operational. This explains why with only about 14/81 projects not yet operational, there are more than 24,000 "unused" products.
This problem stems from the “rolling” construction and sales method that investors apply when implementing large-scale projects divided into different phases. This is a way to maintain cash flow for investors and attract customers for the next products being sold.
Of the 81 projects spread across the three regions of North - Central - South, the Central region leads with 34 projects due to its advantage of the longest coastline, followed by the North and the South with 29 and 18 projects respectively.
Proportional to the number of projects, the number of resort products in the Central region also leads with more than 23,500 products, accounting for 53% of the total number of resort products that have been handed over nationwide since the beginning of 2020.
Of these, there are up to 16,000 products that have not been "lit up" in the Central region, mainly distributed in Khanh Hoa, Binh Thuan, Binh Dinh and Phu Yen. In the North, there are still 5,000 products that have not been operated, scattered in Hoa Binh, Hai Phong and Phu Tho. And in the South, there are still 3,000 products that have not been operated, the majority of which come from products in Kien Giang.
What is the cause?
Among resort products, the high-rise resort segment is often condotels/serviced apartments. This type of product attracts tourists because of its reasonable rental cost while still ensuring a full experience of service amenities.
Because it is easy to reach end-user customers, high-rise resort products are often prioritized by investors after completion over low-rise products.
BHS R&D department recorded that from the beginning of 2020 until now, the high-rise resort segment has about 24,200 products that have been and are being handed over, the number of products that have been operated has reached 54%.
Meanwhile, of the more than 19,800 low-rise resort products, only about 30% have been completed and put into operation, meaning there are still more than 13,000 low-rise products lying idle waiting to be exploited and used.
Mr. Hoang Huu Minh Dung, Head of R&D Department of BHS Group, acknowledged that in addition to the difficult situation of the entire real estate market due to the general economic recession.
The large proportion of resort real estate products that are “left alone” due to the lack of professional operators is part of the reason why resort real estate is less attractive to investors. Prices in this segment are forecast to continue to stagnate and will be the slowest to recover.
More than 24,000 resort real estate products from projects that have been handed over but have not yet been put into operation are a "pain point" not only for owners but also for investors when the projects have been handed over but lack vitality and do not bring the expected value.
This is a problem that investors need to measure and carefully prepare for operational capabilities when participating in this segment.
"The problem now is what solution is there to prevent resort products in general and especially low-rise products from being "left alone", reducing the burden of the oversupply crisis on the market," said Mr. Dung.
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