Resort real estate is still in a state of "cutting losses"

Liquidity has not improved yet

According to a recent survey by Batdongsan.com.vn, the situation of "cutting losses" continues with types of resort real estate, especially condotels - hotel apartments. Although there are no longer massive sales like during the COVID-19 pandemic or the "frozen" market period in early 2023, the news of "cutting losses" continuously being pushed to the real estate market has shown the negativity of this market.

These sales ads come from many projects, ranging from Quang Ninh - where the most resort real estate projects in the North are concentrated to Quang Binh, Da Nang, Kien Giang, Vung Tau... Especially with the type of resort villas, it is noted that in some projects, the "loss-cutting" price has decreased from 3-9 billion VND/unit compared to the period when the market was bustling.

Many "loss-cutting" resort real estate ads are posted on real estate markets.

As for Condotel, it seems that many investors are fed up with this type of property because there are still many problems such as unsolved legal issues, unsatisfactory profits and especially disagreement with the investor's operating and management methods. With this type, the loss-cutting price usually falls between 15-30% depending on the project and area.

A recent report by DKRA Vietnam also shows that the lack of liquidity is continuing with investors in most resort real estate segments nationwide. In August 2023, the resort townhouse/shophouse segment sold only 3 units, resort villas sold only 9 units, and condotels sold 17 units.

This situation has pushed the market inventory to a high level. Accumulated to June, condotel inventory has skyrocketed to more than 42,000 units, while beach shophouses and resort villas combined are about 30,000 units.

Poor liquidity causes resort real estate inventory to increase day by day.

Faced with this situation, project investors continue to widely apply many preferential policies, quick payment discounts, interest rate support, principal grace period, leaseback commitments... to stimulate market demand. In some individual projects, resort villa prices are reduced by 40-50% for customers who pay quickly.

The causes and existence of the frozen resort real estate market have been clearly pointed out, including issues related to the recovery of the tourism industry. With a small number of visitors, the profitability of resort real estate has been greatly reduced, leading to many investors no longer wanting to pay attention to this market.

Tourism industry will not recover in the short term

According to research by Savills, business activities for leisure needs such as hotels in most countries around the world are gradually recovering to pre-pandemic levels, except in the Asia Pacific region.

In Southeast Asia, Singapore is leading the recovery, driven by growth in average room rates (ADR). Thailand has also seen a good recovery. Meanwhile, business activity in the Vietnamese market is below pre-pandemic levels, as reflected in both occupancy and ADR.

Mr. Mauro Gasparotti, Director of Savills Hotels, commented: “The factors affecting the Vietnamese resort market can be divided into three groups: short-term, medium-term and long-term. Each group has a different impact on the market recovery process. In the short term, the absence of Chinese visitors, who accounted for 32% of total international visitors to Vietnam in 2019, has brought many challenges to the resort business. In addition, the cost of long-haul flights has become more expensive, which has also affected the recovery of some markets, such as the European market. Compared to the same period in 2019, the total number of European visitors to Vietnam is still about 38% lower than the pre-pandemic level."

Mr. Mauro Gasparotti, Director of Savills Hotels.

Data shows that in the first eight months of 2023, the Asian tourist market to Vietnam was also 32% lower than the pre-pandemic level. South Korea is currently the largest international tourist market to Vietnam, but the total number of visitors is still lower than in 2019.

As for the populous market like China, the number of visitors to Vietnam only reached 950,000 total visitors, equivalent to 28% compared to the same period in 2019. The American and Australian tourist markets were about 8% lower than the same period in 2019, reaching a total of 900,000 visitors, mainly tourists from the US and Australia.

Along with the slow recovery of demand, the oversupply situation also affects the ability to recover and develop. Statistics from Savills Hotels show that since 2016, an average of about 15,000 rooms in the mid- to high-end segment have entered the accommodation market each year. Thus, the room supply has doubled in just six years.

Domestic tourists remain the main driver of tourism in Vietnam. In the first eight months of 2023, Vietnam’s tourism industry welcomed 86 million domestic visitors, up 7.8% year-on-year. This is expected to be a growth driver for the tourism industry in the medium and long term.

Regarding another issue of market supply, Savills experts said that the Vietnamese resort industry is considered to have great potential, however, not all models can operate effectively. Some investors rushed into the market without a thorough assessment of local market conditions, even assuming that all hotel business models are the same.

This makes the planning and implementation of the project not done properly, limiting the project's ability to operate after completion. Meanwhile, depending on market realities, some hotel models are able to operate more effectively.

Source: https://www.congluan.vn/bat-dong-san-nghi-duong-van-dang-trong-tinh-trang-cat-lo-post266842.html