Southern resort real estate market "in reverse gear"?

Project "standstill"

In previous years, when mentioning the resort real estate segment, coastal villas, apartments, condotels, etc., many people were surprised by the rapid development. Investors competed to sell, introduce products, and commit to profits and schedules for investors.

This segment has pushed market liquidity up and made the resort real estate market an attractive investment option.

However, since 2022, resort real estate projects have slowed down, and many projects have even "regressed" due to the impact of the market economy, legal tightening by authorities, and customers' difficulties in borrowing capital from credit institutions.

According to the assessment report of DKRA Vietnam (a real estate market research unit), currently, the resort real estate type has recorded a sharp decline in supply and consumption compared to the same period in 2023 in most segments.

Specifically, in the resort villa segment, primary supply decreased by 8% compared to the same period, mainly concentrated in the Central and Southern regions. Overall market demand was low, with consumption decreasing by 15% compared to the first quarter of 2023, the lowest level in the past decade.

Primary selling prices continued to trend sideways. The secondary market recorded an average price reduction of 15% - 20% compared to the contract price. Policies of profit/revenue sharing/commitment, interest rate support, and principal grace period were still widely applied to increase liquidity but were not as effective as expected.

The resort townhouse/shophouse segment recorded a continued decline in supply, with more than 97% of primary supply in the quarter coming from inventory of old projects.

The market has not yet escaped the “dark zone” despite the many improvements in the tourism industry. Primary prices have not fluctuated much and continue to trend sideways. The market continues to face many difficulties in liquidity and price increase potential when investor confidence and the recovery of this segment are still very low.

A coastal subdivision of a 5-star resort real estate project complex.

Condotel segment, primary supply in the first quarter of 2024 only increased slightly by 6% compared to the same period last year, the main products still come from inventory of old projects.

Overall market demand recorded the lowest level in the past 5 years. Primary prices remained unchanged compared to the same period and remained high due to high input costs. Sales policies that focus on supporting cash flow such as extending payment schedules, principal grace periods, interest rate support, etc. continued to be widely applied to stimulate market demand.

The market is "hibernating"

According to many brokerage companies and sales channels, from the end of 2023, the resort real estate segment in the southern market such as Ba Ria - Vung Tau; Binh Thuan... has almost no investors implementing sales or advertising activities for products.

Mainly, businesses focus on completing legal procedures, building projects to deliver to customers on time or operating temporary subdivisions for profitable leasing.

According to records, in Ba Ria - Vung Tau province, projects such as Charm Ho Tram with resort apartment products, Condotel, resort villas, hotels are offered for sale from 2021 and are expected to be handed over at the end of 2024.

However, up to now, the project has only completed the rough construction of some items and is still unfinished and cannot be handed over to customers or put into operation.

A project that has not been handed over to customers for use, inside many rough construction items are being built.

In Binh Thuan province, the Thanh Long Bay project with about 90 hectares has also been offered for sale since 2019. However, only a few subdivisions have been built by the investor and have not yet scheduled a handover date for customers.

Also in Binh Thuan province, the Sumerland Mui Ne project of Hung Loc Phat was advertised in 2019 as a 5-star resort, entertainment, townhouses, hotels, etc. However, the investor is currently still under construction and has not yet handed over.

Mr. Le Dinh Lang, Director of Song Long Real Estate Investment, Construction and Development Company Limited, commented: “After condotels were "broken" by the authorities tightening the law and investors no longer had enough power to pay profits as committed, as well as slow investment progress, customers were no longer interested in buying resort villas. Therefore, currently, market liquidity is poor, there are no buyers and sellers because customers do not want to take risks. In particular, projects that have been on sale for 4-5 years but have not completed some areas and have not been handed over attract customers.”

According to Mr. Lang, the current legal system is very important for the real estate market. Previously, some investors did not have time to prepare the legal system before launching their products to the market. Only when they were "tightened" did they see the consequences, and customers were also in trouble because their capital was buried in the product.

A resort real estate project in Ba Ria - Vung Tau province.

Mr. Ha Van Thien, Deputy General Director of Tran Anh Real Estate Company, also commented that, up to now, while other segments have shown many signs of recovery, resort real estate has not yet escaped the "gloomy" state.

Businesses developing in this segment will certainly need a long time to complete legal procedures, prepare financial resources to speed up progress, implement infrastructure projects, etc., then 3-4 years from now, the resort real estate segment can return.

Supply forecast to increase slightly, liquidity is poor

According to DKRA's forecast, in the coming time, for resort real estate, the supply of condotels is expected to increase slightly compared to the first quarter of 2024, fluctuating around 100 - 200 units, mainly concentrated in Ba Ria - Vung Tau. Meanwhile, the supply of resort villas and resort townhouses/shophouses has not fluctuated much compared to the previous quarter, forecasting to provide the market with primary supply of 100 - 150 resort villas and 80 - 100 resort townhouses/shophouses, respectively.

Overall market demand continues to remain low, with the downward trend expected to last until the end of 2024. Primary prices remain stable and are unlikely to see significant fluctuations in the short term. Discount policies, interest rate support, principal grace period, lease commitments, etc. will continue to be widely applied in the coming quarter.

Source: https://www.nguoiduatin.vn/thi-truong-bat-dong-san-nghi-duong-phia-nam-cai-so-lui-a669641.html