Hospitality real estate continues to be the property market with the highest potential in 2016 and into 2017, a property analyst has forecasted.

Speaking at "Vietnam’s Real Estate Market 2016-2017: Overview and Forecast" conference held by batdongsan.com.vn on December 10, Mr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment believes that the market segmentation has shown huge potentials.

“The segment creates excellent opportunities for financial gains ” he said. “It is known in Vietnam as the new, non-traditional method of investment, but it is not new in other countries. The method is the sharing of profits between developers and housing owners.”

Previously, gold, not land, was the preferred investment but that appears to be changing. This market segment has attracted the Vietnamese public investment throughout 2016.

Many big hospitality projects were launched this year, accounting for 10 per cent of the total projects. Investment in the hospitality real estate segment is the trend and results in big benefits for investors in Vietnam.

Mr. Vo forecasts that development in the segment will increase in many locations in 2017. However, space should be allocated in places which have the potential for tourism for hospitality development leading to higher gains.

Mr. Can Van Luc, finance and banking expert, agreed, saying that the segment currently has a high demand which should continue to 2017. In particular, the growth in foreign tourist arrivals is high with an increase of 25 per cent and Vietnam will host the Asia Pacific Economic Cooperation (APEC) summit in Da Nang next year that will be another opportunity for developing the segment.

The experts said that the demand of buyers investing in the hospitality segment is higher than those buying a residence. "Investing in the high-end real estate segment will change to investing in the hospitality segment in 2017," said Mr. Vo.

In 2016, large property developers, such as BIM Group, Sun Group, Vingroup and CEO Group, have entered the race to develop luxury resort properties in Phu Quoc Island. The island has turned into a leading tourism destination thanks to improved infrastructure, the beautiful beach and easy connectivity with major cities, which are only a two-hour flight away.

Da Nang is also still on the radar for foreign investors in the hospitality market due to its long, white-sand beaches, and increasing international connectivity. The city has pioneered luxury coastal homes and is second behind Nha Trang in total available property, with 1,199 villas and 3,367 apartments, according to a recent report by Savills Vietnam.

Successful developments in the city include Ba Na Hills, Ocean Villas, Hyatt Regency, Furama, Intercontinental, and Azura. Large-scale upcoming projects include Soleil Danang, Coco Bay, Da Phuoc, Han Riverside, Ariyana, Central Coast, Vinpearl Han River, and Ocean Suites & Estates.

VN Economic Times