As resort markets in Southeast Asia go, Vietnam could be considered the current jewel in the crown. At this point in time Thailand and Bali are elite markets that demand premium prices for quality properties in scarce beachfront locations. Cambodia has yet to live up to the hype (though admittedly development does take years), fair or not Boracay is the perceived sum total of Philippine resort locations and Myanmar remains a question mark. Which leaves Vietnam.
As a market, Vietnam is the tortoise to many other hares; slow and steady over the last few years. The country is getting a burst of speed on account of global agencies promoting the country and new direct flights to Da Nang — widely considered to be the region’s next great resort location in a country quietly forging its own unique identity. “The proud and resilient people of Vietnam bestow the country with a unique charm. [They] are incredibly hospitable while projecting a strong aura of optimism as they move forward to the future,” begins Michael Piro, General Director of Sotheby’s Vietnam International Realty, which opened offices in 2008 and 2011, by way of explaining Vietnam’s appeal for investors. The people lead directly to lifestyle, very often the key component for buyers considering a holiday home in addition to investment potential. Perhaps most crucially is its stability. As Piro sees it, consistent political unrest in Thailand and three bombings in Bali since 2002 make Vietnam a safe choice. Owners can nosh on one of the healthiest cuisines in the world while basking in history and natural beauty with peace of mind.
Piro also separates the Southeast Asian markets by their various developmental stages, which Vietnam stacks up favourably against, particularly for investments. “We see Thailand as a more mature market where much of the exponential growth has already occurred and frontier investors of the past have reaped the benefits while we see Cambodia and Burma (to a greater extent) as pre-emerging markets with limited opportunities for investors now,” he explains. “We believe now is Vietnam’s time as the country has experienced a prolonged period of political stability, progressive reforms, advancing infrastructure and a unmatched demographic dividend with 62 percent of the population of working age. We are now seeing a supply of quality real estate come on to the market and transparent legal structures to provide foreigners with access to Vietnam’s real estate market.”
Return to China Beach
So where is some of this supply located? Not surprisingly, resort locations are the strongest performers with the best properties right now. Piro notes that supply in key urban areas Hanoi and Ho Chi Minh City averaged around 79,000 available units at the end of 2012, but Da Nang offered fewer than 400 beachfront condominiums. As any Hongkonger can attest, it’s all about supply and demand — and demand for Vietnamese resort real estate is rising. While Piro concedes there are indeed some good opportunities in the urban centres — Jones Lang LaSalle’s fourth quarter 2012 property market brief noted HCMC prices were down approximately 4 percent over the year before, Hanoi’s 11.1 percent — ultimately, “We believe resort market is the favourable segment for foreign investors.”
Da Nang and Hoi An both benefit from strong infrastructure, pristine beaches on the South China Sea, close proximity to major UNESCO sites (Hoi An Old Town, Imperial Hue, My Son), two golf courses and in Da Nang’s case a tradition of leisure lifestyle dating to the Vietnam War. Additionally Dragonair’s new direct flight to Da Nang makes access for Hong Kong investors all that simpler. Banyan Tree and Angsana recently opened properties in the area to go along with the Hyatt Regency Danang Resort and Spa and The Nam Hai. In March 2013 JLL reported Da Nang is expected to add 1,800 hotel rooms this year. Average occupancy in 2011 was around 65 percent, with higher end hotels posting better numbers.
Five Star Lifestyle
The Hyatt offers the central coast’s first branded residences, over 200 apartments and villas that come with all the five-star benefits of a Hyatt hotel beginning at US$200,000 (HK$1.6 million). Located a few minutes from the Montgomerie Links and Dunes courses, the Hyatt’s residences span four towers in various configurations surrounding the hotel’s boutiques, meeting spaces, restaurants, bar, beachfront swimming pools, spa and fitness centre. Midway between Da Nang and Hoi An, The Montgomerie Links Residences sit within the Colin Montgomerie-designed golf course and offer sweeping views of the fairways and the ocean. The project could be a golf enthusiast’s ideal vacation home, set between the ninth and tenth holes. Villas begin at around US$500,000 (HK$3.8 million). The Nam Hai, perhaps the first ultra-luxury development to draw attention to Vietnam, is 100 residences complemented by full resort amenities located on Non Nuoc Beach at Hoi An. Villas on the pristine beach are priced at approximately US$2 million (HK$15.5 million).
As evidenced by the boom in Da Nang and the surrounding area up to Hue and down to Hoi An, there’s room to grow in Vietnam. For now the central coast is the place to be. But the adventurous types may eventually want to head south again. “In terms of the next destinations, I would keep your eyes on Phu Quoc Island in the years to come as this area benefits from convenient access from Ho Chi Minh City (a 30-minute flight), an abundance of developable beachfront land and year-round warm weather,” Piro finishes. With almost 3,500 kilometres of coast (not including islands), Vietnam isn’t even close to getting started.