Tourism Property Ready for Growth Opportunities

Despite being affected by the COVID-19 pandemic, tourism property is still a potential segment in the real estate market, playing a great role in making the tourism industry an important sector that contributes to the growth of the economy.

Signs of recovery

As one of the segments directly and adversely affected by the pandemic, tourism real estate products have still maintained their active status and been increasingly attractive because investors still appreciate the high potential for the development of the tourism industry in Vietnam.

According to a report by the Ministry of Construction, since the beginning of 2021, many tourism real estate projects have repeatedly had to postpone their opening schedules due to the pandemic, but the market still has some positive points. A number of hotel projects and tourist villas were still opened in the second quarter of 2021 such as Phu Quoc United Center (Phu Quoc, Kien Giang), and four-star Yes Hotel (Da Nang). The hotel room occupancy rate of the whole market tended to increase as the demand for sightseeing and tourism during the holidays increased at the beginning of the second quarter of 2021.

The statistics of the Vietnam Association of Real Estate Brokers also show that resort real estate had low purchasing power in the first months of 2021. Except for some projects operating in the form of tourism resorts, the absorption rate was about 30-40%. Since social distancing regulations eased at the end of the third quarter, the market has experienced more positive signals. Sales of tourism real estate products nationwide accelerated in the third quarter of 2021. The number of products offered for sale in the market in the third quarter reached 7,206, bringing the total number of products offered for sale in the year to exceed 10,000, with the number of products transacted reaching 2,280 products. Some localities had many products for sale. including Quang Ninh, Thanh Hoa, Da Nang, Phu Quoc, Phu Yen, Khanh Hoa and Binh Thuan.

After the freezing period due to the COVID-19 pandemic, the Government has now allowed a pilot program to welcome international visitors starting from November 2021, along with fully vaccinated domestic tourists in many localities right from the beginning of October 2021, the tourism real estate market has shown signs of recovery and is having many good growth opportunities.

Attractive segment for foreign investors

The contribution of FDI to Vietnam's socio-economic development in the real estate sector, including tourism and resort real estate, is very significant. Currently, FDI capital accounts for an average of 25% of the total annual social investment capital, creating nearly five million direct jobs and tens of thousands of indirect jobs, making a significant contribution to realizing the goal of "industrialization - modernization of the country". Accumulated to December 20, 2021, the total amount of FDI invested in the real estate business continued to rank second at nearly US$61.8 billion, accounting for 15.1% of total investment capital.

As the influx of tourists continues to move toward Asia, Vietnam's tourism real estate market continues to be an attractive destination for domestic and international investors. The localities highly appreciated by investors with the strongest tourism economic development potential in the country are Quang Ninh, Thanh Hoa, Quang Binh, Da Nang, Quang Nam, Quy Nhon, Binh Thuan, Khanh Hoa, Ba Ria - Vung Tau and Phu Quoc. Therefore, the real estate market has recorded strong growth of the tourism real estate segment through the constantly increasing number of transactions.

Tourism - resort real estate development projects, especially those with clear and complete legal status, meeting the conditions and standards of the tourism and resort environment, with well-invested infrastructure, convenient traffic location and invested by investors with high reputation in the market, will be eligible products to attract FDI. Up to now, many large-scale five-star hotels and world-class resorts with FDI capital have sprung up in cities such as Hanoi, Ho Chi Minh City and Nha Trang, contributing to change and upgrade the facilities as well as the quality of resort tourism services of Vietnam, making the country one of the favored destinations of international tourists.

As tourism grows, transactions on tourism real estate are increasing, but legal problems also arise. In fact, many localities are still confused in the process of state management because the system of policies and laws on this segment is still incomplete, unified and synchronous.

According to Mr. Nguyen Manh Khoi, Deputy Director of the Department of Housing and Real Estate Market Management, Ministry of Construction, in order for tourism real estate to develop, Vietnam needs to clear up legal policies on this field, and fulfill the shortages in the legal corridor to develop strong and sustainable tourism in Vietnam.

With the same opinion, Dr. Luong Hoai Nam, a member of the Vietnam Tourism Advisory Board, said that Vietnam had not had specific legal regulations to facilitate as well as attract international investors to tourism real estate, thus, it was necessary to have appropriate policies and laws to create momentum for the development of the tourism real estate market.

According to experts, continuing to improve the investment environment, and perfecting the policy and legal system for tourism real estate are extremely urgent to solve problems in management, investment and owning tourism real estate. In addition, creating unique elements, diversifying utilities, and diversifying tourism products will create momentum for the sustainable development of Vietnam's tourism real estate market.

By Nguyen Mai, Vietnam Business Forum