This features on tourism-focused real estate in Vietnam appears in the latest issue of Dot Property Magazine. Click here to read it.
The robust property market in Vietnam found itself brought to a standstill in the first half of 2020 because of COVID-19. This turned out to be a minor bump in the road, however. A strong government response to the pandemic meant the country’s economy began to recover in a matter of months with tourism at the forefront.
“Many measures to stimulate domestic tourism were implemented and tourism rapidly flourished, proving to be the fastest booming and recovering industry with the epidemic under control,” Ms Bui Thi Thanh Huong, Vice Chairwoman and CEO of Sun Group, reports. “Therefore, the real estate market, especially the tourism real estate market, once again started to attract the interest of investors, especially in areas such as Phu Quoc, Quang Ninh and Sa Pa.”
Research from the Vietnam Real Estate Brokerage Association found that the total supply of tourism real estate products reached nearly 74,000 units with an absorption rate of 43.4 percent in the third quarter, an increase of 2.9 times compared to the previous three months. Additionally, real estate prices also increased during this time. While tourism-focused real estate in other parts of Southeast Asia struggled, the segment in Vietnam was flourishing.
“As a result of the pandemic, many people realized the value of having a second home that could be a safe place to ‘shelter’ when there is risk and epidemic. This explains why the real estate market on Phu Quoc, the island city which did not have any COVID-19 cases last year, attracted investors during that time,” Ms Huong says.
She continues, “the Vietnamese real estate market by the end of 2020 had become more exciting thanks to the buzz surrounding the major announcement of Phu Quoc officially becoming the first ‘island city’ in Vietnam. The bright future of this island, the potential for sustainable value addition and the potential for business in tourism services all combine to make real estate in Phu Quoc very attractive.”
Looking ahead to 2021, many experts have predicted good things for tourism-focused real estate in Vietnam. The country has begun to import and administer the COVID-19 vaccine which means it is only a matter of time before international visitors can return. Other factors, such as land scarcity in Hanoi and Ho Chi Minh City, will also benefit the market moving forward.
“We believe that the tourism real estate segment will continue to add many potential values for development through 2021 and subsequent years,” Ms Huong states. “Besides, land use in major markets, such as Hanoi and Ho Chi Minh City, is almost full, which is another reason for the rise of tourism potential in destinations such as Sa Pa, Quang Ninh and Phu Quoc. Real estate prices in 2021 are likely to continue to increase in localities with good growth potential.”
Unlocking the full potential of tourism in Vietnam
Prior to the COVID-19 pandemic, tourism in Vietnam was taking off. It was one of the 10 fastest growing tourism countries in the world, recording an average growth rate of 22 percent for three consecutive years. There were 18 million international visitors along with 85 million domestic tourists in 2019 with initial projections for 2020 surpassing those totals.
Of course, we know that didn’t happen. However, most officials insist it is only a matter of time before the country surpasses those figures. Even more interesting is the fact that growth during the past few years may have not fully revealed the true potential of the sector. Ms Huong believes the country’s tourism industry is only starting to scratch the surface of what it’s capable of.
“Compared with other countries in the region and around the world, Vietnam not only has advantages in natural resources but also in terms of its political and social stability. Moreover, in recent years, with the participation of major investors, including Sun Group, Vietnam’s tourism infrastructure has seen major investment in large scale and high-class developments that have expanded opportunities for tourism,” Ms Huong states. “The room for Vietnam’s tourism development is still very large; many fields remain open, yet to be adequately explored.”
Ms Huong readily admits that Vietnam needs to overcome several weaknesses in order to be competitive with other countries in Southeast Asia. Introducing visa exemptions; prioritizing marketing and branding for Vietnam tourism; ensuring sustainable tourism development and improving the quality of Vietnam’s tourism infrastructure are just a few things the country needs to work on.
A leader in tourism-focused real estate
Sun Group was the first developer in Vietnam to recognize both the potential and need for tourism-focused real estate in Vietnam. Today, the developer is seen as the leader in the high-end tourism real estate segment having a portfolio of projects known and loved globally.
And while 2020 was one of the developer’s most challenging years on record, it still launched several projects that were in-demand from buyers.
“As a pioneering investor for the high-end tourism real estate segment in Vietnam, we are always adhering to the philosophy of building high class and distinctive projects. Sun Group’s real estate products have been welcomed and appreciated by investors over the years,” Ms Huong reports. “We are very proud that real estate products launched to the market in 2020, a difficult year, still recorded a positive absorption, such as the Sun Grand City Feria project in Bai Chay (Ha Long – Quang Ninh), Sun Onsen Village Limited Edition in Quang Hanh (Cam Pha – Quang Ninh) or Sun Plaza Cau May project in Sa Pa.”
Last year also saw Sun Group’s Sun World Ba Na Hills presented with several awards, including Asia’s Leading Theme Park 2020 and World’s Leading Cable Car Ride 2020, at the World Travel Awards.
“We had a deep desire to elevate the name Vietnam in the eyes of the world with timeless works and projects. The fact that Sun World Ba Na Hills increasingly affirms its position on the regional tourist map and across the world has partly realized that aspiration,” Ms Huong explains.
It wasn’t just the industry celebrating Sun Group’s accomplishments. Sun World Ba Na Hills won the People’s Choice Award for Project of the Year Southeast Asia at the Dot Property Southeast Asia Awards 2020. Ms Huong notes that the honor was both a surprise and a source of immense pride for Sun Group.
“We are delighted that the first entertainment product in the Sun World system of Sun Group has been recognized by many international organizations with various prestigious awards, including Dot Property Vietnam Awards 2020 and Dot Property Southeast Asia Awards 2020. This proves that the development orientation of Sun Group is on the right path,” Ms Huong concludes.