Tran Phuong, an investor in Hanoi, noted that there have been many offers to sell villas and condotels in famous tourism cities, including Da Nang, Nha Trang, Phu Quoc and Quang Ninh. The villas priced at tens of billions dong are now offered with a discount of VND2-3 billion. 

Phuong is eyeing condotels with quoted prices of VND2-4 billion. The condotel owners say that they have to sell at a loss of hundreds of millions of dong. The offers are very attractive, and Phuong has VND3 billion deposited at the bank which can bring modest interest, so he is considering buying a condotel and leasing it.

However, Phuong still cannot make up his mind because there are many unanswered questions. Will it be ‘safe’ if he buys a condotel without a ‘pink book’ (certificate of housing ownership and ownership of construction works)? Have real estate prices bottomed out or will they continue to decrease in the time to come? What profit can he expect leasing condotels?

Nguyen Vu Cao, CEO of Van Khang Phat, a major realtor, said the signs of the resort real estate market recovery are still weak.

“The market segment now is unattractive to investors. The market has very few transactions,” he said.

Previously, the cash flow in the market was strong and it was easy to seek financial sources, so many investors injected money into resort real estate. However, after realizing that profits from condotel leasing were not as high as expected, the capital flow changed direction.

“Investors will not make heavy investments in resort real estate,” Cao said.

Commenting about the ads that say real estate owners have to sell properties to ‘stop losses, Cao said real estate prices are still high and don’t reflect the real value of the properties.

“The prices have decreased compared with the peak prices, but they are still higher than the real value, compared with the ‘health’ of the national economy,” he said.

“Real estate prices are overly high if compared with the Vietnamese income per capita. The prices are going down, but still high in comparison with 2019-2020,” he concluded.

The resort real estate prices in Da Nang, Nha Trang, Ha Long (Quang Ninh), Phu Quoc and Quy Nhon are all too high. The selling prices have been ‘inflated’ by 5-6 times. In some areas, the offered prices are 10 times higher than that of 10 years ago.

According to Cao, the resort real estate market segment will not recover until 2026 at the soonest.

A question has been raised that whether the investors with the capital of several billions of dong should pour money into resort real estate. Cao said there is no single answer to the question. He will make a decision after considering the land area, projects and geographical positions. The prices depend on many factors. Investors need to foresee the number of travelers to the areas. Investors should only buy resort real estate in the areas which expect a high number of travelers. 

“If you just buy resort real estate and leave it idle, hoping to gain profit when the real estate increases in prices, it won’t bring expected profits in short term,” he said.

Meanwhile, if investors buy resort real estate for leasing, the expected profit margin may be even lower than the interest from bank deposits. 

“In the long term, investing in housing real estate will be safer than other market segments,” he said.

A report by Savills Hotels showed that the average room occupancy rate in Vietnam hovered around 40 percent in the first eight months. Meanwhile, the figures were over 50 percent in Thailand, the Philippines, Indonesia and Malaysia. A record high occupancy rate of 75 percent has been reported for Singapore.

The recovery of business activities is uneven in different localities. Nha Trang - Cam Ranh and Phu Quoc face more challenges in improving room capacity.

In Phu Quoc, the average capacity is only 30 percent and it is one of the least profitable markets in Southeast Asia. The same capacity has been reported for Nha Trang - Cam Ranh area is also at a similar level. However, the room rate in Nha Trang - Cam Ranh is $100 per night lower.

Hong Khanh