Resort real estate businesses still "out of breath"

Loss-making business, large debt

Reporting their financial situation to the Hanoi Stock Exchange (HNX), many resort real estate businesses showed losses in the first half of the year.

Phu Quoc Tourism Investment and Development Joint Stock Company – the unit managing a chain of resorts in Phu Quoc (Kien Giang) – announced a loss of nearly 306 billion VND while in the same period last year it made a profit of 832 billion VND. As a result, the profit after tax/equity ratio is negative.

Or Hung Thinh Quy Nhon Entertainment Services Joint Stock Company - the investor of a resort project in Quy Nhon (Binh Dinh) - continued to lose more than 199 billion VND in this period, extending the loss of 34 billion VND in the previous period.

The company also lost more than VND152 billion in 2023. Previously, in the 2021-2022 period, the company earned a total profit of more than VND611 billion. Hung Thinh Quy Nhon also negotiated with bondholders to extend the payment of bond interest for certain lots, with the payment date postponed from the first quarter to July-August this year.

Another company doing tourism projects in Hai Phong, Van Huong Investment and Tourism Joint Stock Company, also reported a loss of VND34.4 billion in the first 6 months of the year. Since 2021, when it submitted its report to the HNX, Van Huong Tourism has been making losses. The company has lost a total of VND117.2 billion.

Another company that owns a resort project in Da Nang that is also in a state of continuous loss is Tonkin Land Joint Stock Company. In the first half of the year, this company lost more than 8 billion VND. In consecutive years 2021-2023, the company has suffered losses with a total loss of 61.5 billion VND.

Crystal Bay Joint Stock Company, which has implemented many resort projects in Khanh Hoa and Ninh Thuan, also lost nearly VND76 billion in the first half of the year. This figure has shortened compared to the loss of nearly VND136 billion in the same period last year.

Or BIM Real Estate Joint Stock Company - the investor of resort projects in Ha Long (Quang Ninh), Phu Quoc (Kien Giang) also reported a loss of 341 billion VND while in the same period last year it made a profit of 810 billion VND. This is the first loss since 2021 that the company reported. In the period 2021-2023, the company made consecutive profits, totaling 4,611 billion VND.

Not only are they losing money, many businesses also use high financial leverage, with debt many times larger than equity. As of June 30, Phu Quoc Tourism Company had a debt-to-equity ratio of 13.69 times, equivalent to a debt of about VND40,800 billion. Of which, outstanding bonds were about VND7,509 billion.

Hung Thinh Quy Nhon Company has a debt/equity ratio of 4.86 times, equivalent to a debt of about VND 38,768 billion. Of which, outstanding bonds are VND 7,259 billion.

Van Huong Tourism Company has a debt/equity ratio of 8.32 times, equivalent to a debt of VND 24,302 billion. Of which, outstanding bonds are more than VND 4,060 billion.

Tonkin Land also uses high financial leverage. As of June 30, the debt/equity ratio increased to 5.1 times, equivalent to a debt of VND1,105 billion. The company still has insignificant outstanding bonds, about VND22 billion.

BIM Real Estate Company has a debt/equity ratio of 2.86 times, equivalent to a debt of VND 20,140 billion. Of which, outstanding bonds are more than VND 5,422 billion.

Long-term resilience

The Ministry of Construction’s second quarter report noted that the new supply of hotels and resorts nationwide has seen a number of prominent projects come into operation. However, the market continues to remain sluggish and shows no signs of recovery.

Sharing the same view, Mr. Vo Hong Thang - Deputy General Director of DKRA Group - commented that the resort real estate market nationwide in August was still gloomy. Research data from this unit shows that, for resort villas, supply has been almost flat for many months, liquidity is low, demand has decreased by 22% compared to the previous month.

Primary prices have not fluctuated much and continue to trend sideways. Policies of leasing back, buying back, interest rate support, etc. continue to be widely applied but are not as effective as expected. Mr. Thang believes that the market continues to face many difficulties in liquidity and price increase when investor confidence and the recovery of this segment are still very low.

Resort real estate is expected to recover in the long term (Illustration: Trinh Nguyen).

Regarding townhouses and resort shophouses, Mr. Thang said the situation is not much better. Liquidity has almost stagnated, most projects have closed their portfolios, causing the market to record no transactions in the past month.

Primary prices have not fluctuated much, while the secondary market has recorded some products with prices decreasing by 30-40% but still facing liquidity difficulties. Sharp decline in purchasing power, lack of new supply, high-value inventory... have caused significant obstacles in recent months, causing this segment to almost fall into a "prolonged hibernation" cycle.

Regarding condotels, Mr. Thang said that supply continues to decrease, mainly from inventory of old projects (accounting for 99% of total supply). Market demand has decreased significantly, and the selling price level has not fluctuated much. The market is still facing liquidity difficulties and there are no signs of recovery in the short term.

Mr. Dinh Minh Tuan – Southern Regional Director of Batdongsan.com.vn – admitted that the resort real estate market is in the process of continuing to deal with unresolved issues. In the first 8 months of the year, in terms of macro, the factors supporting this market have all grown well, such as the number of tourists and consumption speed. However, in terms of market development orientation, investors are facing problems with product output.

According to Mr. Tuan, product output must have a good leverage ratio, creating a highly sustainable income. Investors participating in the market must hold this real estate and have rental income or suitable for personal purposes. But both of these issues have not been resolved, so the market still has a long time to wait to continue developing.

He predicts that the resort real estate market will not recover until at least 2026. This is because buyer demand has been flat for the past four years, making market demand lower than other types of real estate. There are not many policies to attract buyers, especially for them to access this segment.

Another problem is that the investor's capital has changed. Previously, the investor implemented many policies to accompany buyers for a long time. But later, when the market encountered difficulties in capital sources, the investor no longer had enough potential to offer many attractive policies.

“Resort real estate is lacking in supply and weak in demand, in the context of the general market recovering. Therefore, in terms of trends, it will not be until the end of 2026 that this segment will return to sustainability,” said Mr. Tuan.

To clarify, Mr. Tuan explained that the current resort real estate market needs a clearer legal corridor. In addition, the general market also needs recovery from other segments such as serving real housing needs, townhouses, private houses, and land. People participate in those types, creating liquidity and good growth, then come to segments that may have higher risks such as resort real estate.

Source: https://dantri.com.vn/bat-dong-san/doanh-nghiep-bat-dong-san-nghi-duong-van-hut-hoi-20240920160937825.htm