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| Currently, there are many resort real estate products on the market that have been handed over but have not been put into operation, causing concern for owners and investors. (Source: TCTC) |
Liquidity drops, increasing pressure on resort real estate inventory
Mr. Nguyen Van Dinh - Vice President of Vietnam Real Estate Association said that currently, the whole country has more than 200 tourism real estate projects that have been implemented, creating nearly 100,000 condotels, 3,000 villas, and 15,000 new hotels. However, more than half of those projects are "shelved" waiting for legal solutions.
“If this situation continues, it will discourage investment in the tourism industry, discourage investors, and even local authorities who want to promote investment will face many difficulties,” Mr. Dinh analyzed. The inventory of resort real estate is increasing pressure on this segment.
Currently, there are many resort real estate products on the market that have been handed over but have not been put into operation, causing owners and investors to worry. Many projects have been handed over but cannot be sold, making it difficult for the market to recover.
Mr. Mauro Gasparotti, Director of Savills Hotels, commented that the oversupply of resort real estate stems from the creation of products that are not suitable for market conditions. Some investors rushed into the market without thorough research during the planning process, leading to a gap between supply and demand in some destinations. In addition, in some resort real estate projects, there is a situation of focusing on quantity over quality.
Lack of consideration for market characteristics and industry trends poses many risks when projects are developed but do not meet the needs of tourists. Meanwhile, instead of domestic destinations, Vietnamese tourists can travel abroad more conveniently and easily at a reasonable cost. Therefore, they can choose to change their "taste".
According to a survey by DKRA Group, the total inventory of coastal townhouses increased to approximately 30,000 products. For coastal villas alone, the cumulative inventory by the end of the second quarter of 2023 was up to 15,000 units in both the North and the South.
According to a resort real estate development company in Ho Chi Minh City, the company currently has more than 200 townhouses, resort villas, and coastal shophouses that are “shelved” due to legal issues. Projects that are open for sale are also in a state of stagnation, although the selling price has been reduced, there are still no buyers.
Due to the large amount of inventory, this business is struggling to manage cash flow to pay employees and maintain operations. Currently, the business is promoting incentive and promotional programs to increase sales at the end of the year.
In Da Nang, a resort real estate development company shared that it is also facing a similar difficult situation as the coastal townhouses being sold are selling very slowly. In particular, for high-value resort villas, the inventory value accounts for 95% of the company's product basket.
Ms. Ngan Pham - Savills Hotels Consulting Manager commented that the oversupply situation in the resort real estate market is due to the fact that project investors are currently focusing too much on scale, so they have built at a high density and focused too much on products for sale.
Many investors are racing to develop “luxury” and “wellness” products (accommodation that enhances overall health) but do not really understand these concepts correctly and do not consider the surrounding resonance factors, leading to a situation of surplus and stagnation.
Therefore, Ms. Ngan Pham believes that in order to develop resort products sustainably, investors need to grasp market trends well and conduct careful research during the planning stage. From there, they can create diverse, high-quality products to meet the increasingly diverse needs of customers.
According to Mr. Tran Vu - founder of the research unit SPE.R, the resort real estate segment has not yet escaped the gloomy situation. The market has recorded almost no new supply this year. Meanwhile, old projects are behind schedule, construction is slow, causing a significant impact on market confidence.
Although bank interest rates have decreased, the number of people willing to borrow money to invest is not much, and the "defensive" mindset is still widespread. Therefore, from the fourth quarter of 2023 to the second quarter of 2024, the transaction volume will remain stable, without any sudden changes.
After the above time frame, the market may improve thanks to the State's moves to remove legal obstacles through revised laws - Mr. Vu predicted.
Businesses urged to reduce housing prices and lower profit expectations
The Ho Chi Minh City Real Estate Association (HoREA) has just issued a document requesting real estate businesses to implement the Prime Minister's opinion: to restructure the market segment and reduce housing prices to suit people's incomes to join hands to solve difficulties, helping the market develop safely, healthily and sustainably.
The Association found that businesses "have not yet been actively deployed" as the Prime Minister commented. Meanwhile, since 2018, the Association has issued a document recommending that businesses shift their investment to the affordable small and medium-sized apartment market segment that meets real housing needs, has high liquidity and is sustainable.
The association recommends that real estate businesses reduce housing product prices, reduce profit expectations, and not "keep prices high".
At the same time, businesses increase discounts and have promotional and after-sales policies to stimulate consumer demand in the real estate market to increase market confidence, create cash flow and liquidity for businesses, following the experience of "it is better to sell at a loss than borrow at a profit".
The association recommends that businesses should shift their investment to the affordable housing segment that is suitable for people's income. Businesses also participate in the program to develop at least 1 million social housing apartments in the 2021-2030 period to be able to access the VND120,000 billion credit package with interest rates 1.5-2% lower than normal commercial interest rates.
The Ministry of Construction is about to inspect a series of projects in many localities.
The Ministry of Construction has just sent an official dispatch to the People's Committees of Phu Yen, Phu Tho and Ba Ria - Vung Tau provinces regarding compliance with legal regulations in state management of housing and real estate business.
The Ministry will organize a working group to inspect the state management of housing, real estate business, construction materials, activities of specialized construction laboratories and the reception of dossiers for declaration of conformity in the period 2016-2022.
The document clearly states that the Ministry of Construction inspects the direction and management of localities in implementing housing development programs and plans; planning, land allocation, and capital allocation for development of each type of commercial housing, social housing, and resettlement housing, etc.
Notably, with commercial housing, the Ministry inspects the above localities in housing management and development according to the provisions of the Housing Law; investment and construction procedures for approving or deciding on project investment policies, selecting project investors, approving projects, etc.
Regarding social housing development, the Ministry of Construction assessed the implementation of the Project "Investing in the construction of at least 1 million social housing apartments for low-income earners and industrial park workers in the 2021-2030 period"; implementing a credit package of VND 120,000 billion for social housing.
Regarding the renovation of old apartments, localities must report the results of the implementation of the renovation of old apartments in the 2016-2022 period and the plan for the renovation of old apartments in the 2021-2030 period.
In this inspection plan, the Ministry of Construction also reviewed and inspected the results of implementation of resettlement housing development investment projects; results of implementation of state-owned housing.
In particular, the People's Committees of the provinces need to report an overview of the real estate market situation in the area in the period of 2016-2022; the list of real estate trading floors eligible to operate in the province and the situation of granting real estate brokerage practice certificates.
The Ministry of Construction requires the 3 provinces in the inspection plan to report on the implementation of other real estate projects such as resort villas, tourist apartments, office apartments and the implementation of the law on real estate business and related laws. The number of projects that have documents for selling future housing and the guarantee for selling future housing; the real estate inventory situation.
The Ministry also requested each locality to propose 10 housing projects, urban areas, and large real estate projects for the inspection team.
Responsibility for public disclosure of social housing project information
Decree No. 100/2015/ND-CP of the Government stipulates the responsibility of People's Committees of provinces and centrally run cities in publicly announcing standards, subjects and conditions for purchasing, renting, and hire-purchasing social housing (NƠXH) within the locality in accordance with the conditions of each locality.
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| In case citizens have a need to buy social housing, they can look up information about social housing projects that are about to be opened for sale on the Electronic Information Portal of the Department of Construction where the project is located or through the real estate trading floor of the investor and local press information.i. (Source: VNN) |
The current housing law has specific regulations on the public announcement of social housing project information and the responsibilities of local authorities and enterprises in providing housing for low-income people and industrial park workers. In particular, the search for information on social housing projects is regulated in Point a, Clause 1, Article 20 of Decree No. 100/2015/ND-CP dated October 20, 2015 of the Government on the development and management of social housing.
Specifically, after starting the project, the investor of the social housing construction project is responsible for providing information related to the project (project name, project investor, project construction location, contact address, address for submitting registration application); project implementation progress, project scale; number of apartments.
Including: Number of apartments for sale, number of apartments for rent, number of apartments for lease purchase); apartment area, selling price, rental price, lease purchase price (provisional) for each type of apartment; start and end time of receiving registration applications and other related contents) to be publicly announced on the Electronic Information Portal of the Department of Construction in the locality where the project is located.
Post at least once in the Newspaper, the mouthpiece of the local government, and announce at the real estate trading floor of the investor (if any) so that people know, register and monitor.
According to the above regulations, in case citizens have a need to buy social housing, they can look up information about social housing projects that are about to be opened for sale at the Electronic Information Portal of the Department of Construction where the project is located or through the real estate trading floor of the investor and local press information.
Regarding the responsibility of local authorities and enterprises in taking care of accommodation for low-income people and industrial park workers, to enhance the role and responsibility of local authorities and enterprises in taking care of accommodation for low-income people and industrial park workers, the Government has also stipulated the responsibility in Decree No. 100/2015/ND-CP.
Article 30 of Decree No. 100/2015/ND-CP clearly states: Responsibilities of People's Committees of provinces and centrally run cities... 3. Specify and publicly announce standards, subjects and conditions for purchasing, renting, and hire-purchasing social housing within the locality in accordance with the conditions of each locality; organize management and closely monitor the sale, rental, and hire-purchase of social housing; promulgate price frames for selling, renting, and hire-purchasing social housing within the locality according to authority.
Regarding the responsibilities of enterprises with production facilities in industrial parks, Article 31 clearly states:
1. Enterprises that have been and are producing in industrial parks are responsible for developing a housing solution plan and allocating financial resources to support investment in developing social housing for households and individuals at that facility who are facing housing difficulties.
2. Newly established or expanding enterprises are responsible for ensuring housing for households and individuals working at their units.
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