Paving the way for businesses to access resort real estate

Resort real estate is slowing down

According to statistics from the Vietnam Real Estate Association (VnREA), there are currently about 239 resort real estate projects nationwide. Of which, the estimated value of condotel projects is about VND297,128 billion; villa projects are estimated at VND243,990 billion and shophouse projects are about VND154,245 billion. The total value of these three products is about VND681,886 billion, equivalent to USD30 billion.

However, after a period of rapid development, in recent years, this segment has slowed down. The market is almost frozen, with insignificant transaction volume.

According to a recent survey by the Vietnam Real Estate Research Institute, among the factors hindering the speed, scale and determination to participate in the Vietnamese tourism and resort real estate market, economic and financial factors account for 30%, legal factors account for 50% and other factors account for 20%.

Speaking at the Scientific Workshop “Amending the Land Law: Creating land for tourism” on the morning of October 19, Dr. Can Van Luc - Chief Economist of BIDV and Director of BIDV Training and Research Institute also pointed out that currently, the policy of prioritizing and increasing investment in tourism infrastructure has been consistently directed in many documents of the Party and State as well as the industry.

Real Estate - Paving the way for businesses to access resort real estate — Dr. Can Van Luc spoke at the Workshop.

However, these policies have not yet been realized into unified, breakthrough and specific solutions to develop tourism infrastructure in a synchronous and sustainable manner.

Mr. Luc said that preferential policies for the tourism industry have not been clearly specified in a number of related laws and regulations; the legal framework for land allocation for tourism development projects still has many shortcomings and regulations on the granting and transfer of land ownership and assets attached to commercial land and tourism services (condotels, shophouses, etc.) are still incomplete and inconsistent.

In fact, in recent times, Mr. Luc assessed that Vietnam's tourism industry has had strong development steps with many encouraging achievements but is still not commensurate with its potential.

“The tourism industry still has many shortcomings and limitations, especially in tourism service infrastructure, which need to be promptly overcome so that Vietnam can be among the top 30 countries with the world's leading tourism competitiveness by 2030 as set out in the target,” said Mr. Luc.

Need to change land access mechanism

In order to overcome the limitations and develop the tourism industry in the coming time, Dr. Can Van Luc believes that it is necessary to have innovative thinking and strong consensus of the entire political system from the central to local levels, ministries, functional departments, along with the tourism industry itself to quickly overcome current difficulties and challenges, take advantage of opportunities and trends, and quickly recover and develop rapidly and sustainably in the future.

From there, Mr. Luc made 3 recommendations for the Land Law (amended). Firstly, the Draft Land Law (amended) should consider supplementing the mechanism of land allocation and land lease through land recovery for tourism development, entertainment and recreation projects with large scale or total investment, especially tourism projects in difficult areas, mountainous areas, border areas, islands, etc.

Second, it is necessary to consider adding a mechanism for leasing and transferring the right to use commercial and service land for tourism development in Article 121 of the Draft Land Law (amended) to help remove bottlenecks in the tourism and resort real estate sector.

Finally, legalization along with increased sanctions against cases of intentional violations of laws on planning and tourism development investment, aims to limit speculation, waste and land disputes.

Real Estate - Paving the way for businesses to access resort real estate (Figure 2). — Mr. Nguyen Hong Chung - Chairman of DVL Ventures and Vice Chairman of Hanoi Real Estate Club.

Also contributing his ideas, Mr. Nguyen Hong Chung - Chairman of the Board of Directors of DVL Ventures, Vice Chairman of the Hanoi Real Estate Club proposed regulations on land creation for tourism in the draft Land Law (amended).

Accordingly, Mr. Chung pointed out that investors in resort tourism projects are having a very difficult time accessing land. He said that projects that are not subject to land acquisition by the State but are implemented through the transfer, lease of land use rights, and capital contribution in the form of land use rights are very difficult and complicated.

Because, currently the law does not have a specific mechanism and policy to encourage and support investors in the process of negotiating with landowners.

Tourism development projects were included in the list of land acquisition by the State in the 2003 Land Law. Decree 84 of 2007 also legalized tourism as a key economic sector and eligible for land acquisition by the State. However, in the 2013 Land Law, this provision was eliminated.

In order for tourism to truly become a spearhead economic sector, as proposed in Resolution 18 of the Politburo, Mr. Chung said that the new Land Law needs to have specific regulations on tourism land. At the same time, there must be truly open policies and mechanisms on land, taxes, investment, etc. for tourism to develop.

“Economic development in each stage has different priorities. When we have identified tourism as a spearhead, tourism projects such as amusement parks, entertainment areas, multi-purpose complexes, etc. must be added to the list of land that the State will reclaim for socio-economic development,” said Mr. Chung.

Sharing the same view, Master Nguyen Van Dinh - Real estate legal expert expressed his agreement with the idea of adding to the draft the case of land recovery to implement purely tourism, entertainment and recreation projects without housing functions.

Mr. Dinh said that if the regulations are kept as in the current draft law, the implementation of key tourism projects will be blocked, thereby causing consequences of unused residential land, wasting resources; or if used, it will form a residential function within the scope of the tourism project, and long-term residents living in the project will reduce the level of luxury of a resort tourism project .

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