Resort real estate shortage in supply in 2023

Decline in all aspects

Once one of the segments that investors actively "hunted" and brought huge profits. Currently, the resort real estate segment is facing many difficulties, when in 2023 this segment "declined".

According to Mr. Pham Lam, Chairman of the Board of Directors of DKRA Vietnam, in 2023, resort real estate recorded a sharp decline in supply and consumption compared to the same period in 2022.

DKRA's report shows that in the resort villa segment, the market recorded 2,542 primary supply units from 67 projects in 2023, down 58% compared to the previous year.

The absorption rate reached 21% (equivalent to 526 units), only 13% compared to 2022. Most of the supply came from the Central region, accounting for 36% of the total supply and 86% of the total primary consumption in the whole market.

Resort apartment supply to decline in 2023.

The primary selling price level has not fluctuated compared to the same period and continues to remain high, ranging from 6 to 155.7 billion VND/unit. Although many sales policies have been applied such as profit commitment/sharing, interest rate support, principal grace period, fast payment incentives, etc. to increase liquidity, they have not been as effective as expected.

Meanwhile, the resort townhouse/shophouse segment recorded primary supply in 2023 from 34 projects, providing the market with about 3,271 units, down 62% compared to 2022.

Market demand decreased sharply with the consumption reaching about 366 units, equivalent to 6% compared to last year. Transactions were mostly concentrated in projects with complete legal documents, developed by large investors and priced under 10 billion VND/unit.

Meanwhile, the condotel segment in 2023 recorded 5,937 units opened for sale from 45 projects (including 4 new projects). The consumption rate on primary supply reached 20% (1,164 units).

According to Nguoi Dua Tin , the resort real estate market in recent years has mainly developed in provinces such as Khanh Hoa, Da Nang, Binh Dinh, Ba Ria - Vung Tau, Binh Thuan... and further to Phu Quoc, Kien Giang province.

In the above areas, the "big guys" in the real estate industry have invested in a series of infrastructure, service and accommodation businesses to stimulate people's shopping and resort needs.

However, market liquidity is low, transactions are mainly concentrated in projects with complete legal documents, developed by investors with strong finances and product value under 3 billion VND/unit. Primary prices have not fluctuated compared to last year and remain high due to high input costs.

According to the latest announcement of the Vietnam Real Estate Brokers Association (at the end of December 2023), in 2023, the whole country will receive about 3,165 new tourism - resort real estate products, down more than 80% compared to 2022.

The entire market recorded 726 successful transactions of tourism and resort real estate products in 2023. Transaction volume has not recovered as expected because some projects that many investors are interested in are facing legal problems and cannot be launched.

While inventory is mainly high-end, high-value products, it must compete directly with loss-cutting products from investors who purchased earlier.

It takes a long time to recover.

With the current real estate market situation, the resort real estate segment is considered to be at "bottom".

In addition to legal problems, credit and working capital sources have also been limited in pouring into resort projects, making this segment gloomy. This segment only receives attention when localities focus on attracting and stimulating tourism.

Mr. Nguyen Van Dinh, Chairman of VARS, said that in the gloomy picture, the resort market unexpectedly received a bright spot from the end of 2023. The appearance of positive recovery signals from the real estate and tourism markets has prompted investors to speed up progress and supply to the market.

Stimulating tourism and completing infrastructure and utilities are opportunities for the resort real estate segment to develop in the coming time.

VARS said that in the fourth quarter of 2023, the condotel project in Phu Quoc (Kien Giang province) had a price of about 55 million VND/m2, recording 200 transactions out of a total of 400 apartments opened for sale within more than 1 month with the majority of customers being investors.

Compared to previous years, this transaction volume is not much, but in the context of the difficult real estate market, especially in Phu Quoc area, achieving an absorption rate of over 50% is considered a positive signal.

Mr. Pham Lam, Chairman of the Board of Directors of DKRA, predicts that there will still not be many positive signs for resort real estate in 2024. The overall market demand will continue to decline, lasting until the end of the year.

Accordingly, new supply will continue to decrease, condotels are forecast to decrease compared to 2023, fluctuating around 800 - 1,000 units.

Meanwhile, the supply of resort villas and resort townhouses/shophouses is forecast to be equivalent to 2023, fluctuating at 250 - 300 resort villas and 200 - 300 resort townhouses/shophouses, respectively.

The primary price level remains stable and is unlikely to have any significant fluctuations next year. To survive, businesses and investors must launch discount policies, interest rate support, principal grace period, rental commitments, etc., which will continue to be widely applied in 2024.

Commenting on the resort real estate market, Mr. Pham Anh Khoi - PhD - Director of the Institute for Economic - Financial - Real Estate Research Dat Xanh Services said that the real estate market in general is facing many difficulties, not just the resort real estate segment.

“Looking back at a year with many fluctuations in the market and economy, however, with resort real estate, this segment is also being studied by state agencies, with policies to issue appropriate regulations for market development. For example, in 2023, Decree 10 (granting certificates for Condotels, Officetels)... this is considered a move to remove legal obstacles for future resort projects. Helping the market become more transparent and clear,” Mr. Khoi shared.

Some experts also believe that the real estate segment will find it difficult to recover to its “golden” days. However, after the “stumbles”, investors need to improve their legality, sales transparency, and profits.

In particular, it is necessary to develop infrastructure projects with good social and technical infrastructure to attract tourists and buyers, then this market will gradually recover over time.

Source: https://www.nguoiduatin.vn/bat-dong-san-nghi-duong-thieu-hut-nguon-cung-trong-nam-2023-a644390.html