In anticipation of the trend, foreign developers with strong financial capacity have ramped up acquisitions or have been partnering with local developers to scale up projects there.
Central Vietnam features a coastline of scenic beaches which have attracted a growing number of domestic and international tourists in recent years. Consequently, the coastal cities of Danang, Nha Trang, and Hoi An have become popular second-home markets, with completed infrastructure as well as a plethora of living and entertainment services.
Many tourists, investors, as well as locals desire to own beachfront apartments or villas in the area to enjoy their weekend holidays.
On top of this, coastal properties would make good potential investments in the future. In fact, many investors who invested in Danang’s land plots have made a fortune when land prices have risen by 300-400% after 5-7 years of investment.
As market sentiment is improving, individual investors are cashing in on non-Central Business Districts (non-CBD), like the central province of Quang Nam near Danang or the suburban areas of Nha Trang.
In June, Dat Quang JSC and CEN Group unveiled Ngoc Duong Riverside–The Gardens in Quang Nam in the south of Danang. At the launch, hundreds of customers and investors made deposits to snap up land plots, half of whom came from Hanoi and Ho Chi Minh City.
According to Giap Van Kiem, director of STDA Real Estate Project Supermarket System in the central region (the sales agency of the project), a land plot at Ngoc Duong Riverside is priced at VND683 million (US$30,052), which is a reasonable price for investors.
In addition, improvements to infrastructure and the transport system make Quang Nam’s real estate market more appealing to investors.
“It is hard to find development sites in Danang’s CBD, while the neighbouring areas have large land reserves and reasonable prices for private investors. As a result, Ngoc Duong Riverside continues to receive solid interest from investors, prodding CEN Group to pay more attention to this project,” he added.
According to statistics by the Nha Trang-Khanh Hoa Real Estate Association, property giants have secured a firmer foothold in the central province of Khanh Hoa and Nha Trang City in particular during the past three years.
Consequently, the real estate market there has been transformed, thanks to an impressive line-up of old and new projects.
Nguyen Xuan Thuy, chairman of the association, noted that, “By the end of 2016, around 39 resorts were being constructed across Khanh Hoa, with a combined investment capital amount of VND6 trillion (US$264 million). Along with newcomers like Vingroup, other professional developers are also flocking to the market, like Hung Thinh Corporation from Ho Chi Minh City, Duyen Ha JSC, Eurowindow Holding, and MBLand from Hanoi, as well as real estate agencies like Dat Xanh Mien Bac and STDA.”
The infrastructure improvements in Nguyen Tat Thanh Street, the main arterial road of the northern Cam Ranh Peninsula strectching along Bai Dai Beach, and the system of fish-bone roads leading to the sea were highlighted.
A slew of projects developed by famous brands, like Movenpick Cam Ranh Resort, Fusion Resort Nha Trang, and The Anam Resort, are currently under construction.
According to Pham Thi Khanh Ngoc, sales manager of Nha Trang Real Trade and Investment Co., Ltd., the 30-kilometre road running along Bai Dai Beach connecting Cam Ranh International Airport with Nha Trang is packed with 37 resorts under construction.
The resorts are set to open in the next few years, creating a new tourism complex along the road.
The land plot segment is gaining traction alongside a growing hospitality market. Dat Xanh Mien Bac has taken over South Cai River township from Minh Phat Co., Ltd., while its branch company Dat Xanh Nha Trang is responsible for developing the project freshly renamed to Nha Trang Pearl.
Strategically located in the gateway between Nha Trang and Da Lat, Nha Trang Pearl boasts a panoramic view of the Cai River. After the acquisition, the project has made a big splash in the market.
Tran Quoc Trung, general director of Dat Xanh Nha Trang, said that the 50-hectare project is developed with ample social infrastructure and modern technical infrastructure.
Nha Trang Pearl includes land plots for 288 villas, 644 garden houses, 346 townhouses, and five condominiums. The first phase of the project recorded a complete take-up of all products. In the secondary market, prices have been increased by several dozen percent, depending on each plot.
“Most of our clients are from the northern region. In particular, one investor from Hanoi has acquired five plots at the same time. Each plot is priced from VND4.5 million per square metre. All units were usually sold out at the launching events,” he said.
It is notable that the Vietnam Real Estate Association has organised an event for real estate brokers in Nha Trang, which highlights the attractiveness of the market. In fact, most brokers at the event highly appreciated the potential in the city’s real estate sector.
Similar to Nha Trang, Hoi An’s bustling real estate market has been underpinned by a growing tourism sector and billion-dollar investments on international-standard resorts.
Hoiana is the largest casino and resort complex in Central Vietnam, covering an area of 985ha. The US$4-billion project held the groundbreaking ceremony in late April 2016.
It includes resorts, luxury entertainment areas of five-star standard, cultural centres, commercial centres, shopping centres, villas, and marinas.
The project is invested by a joint venture between Vietnam-focused asset management company VinaCapital and foreign partners.
In the future, Hoiana Integrated Casino Resort is expected to turn the economically disadvantaged area to a popular leisure, tourism, and entertainment destination in the region.
In the north of Hoi An, another billion-dollar project known as New Hoi An City is completing the final works to commence the first phase of operation. HB Group has injected US$1.5 billion to develop premium coastal properties on an area of 400ha.
Vietnam’s leading property developer Vingroup also held the groundbreaking ceremony for Vinpearl Hoi An Resort & Villas, representing a total investment capital amount of VND5 trillion (US$220 million).
The 200-ha project features Vinpearl hotel and villas, Vinpearl Golf Club, Vinpearl Land entertainment area, and a hi-tech agricultural park combined with VinEco tourism.
Meanwhile, Dat Xanh Group will implement the Opal Ocean View Resort project on a 185-ha site near South Hoi An. With an investment capital sum of VND4.6 trillion (US$202.4 million), the project includes villas, a beach resort, and a hotel, with synchronised technical infrastructure.
Many coastal property developments are underway in Hoi An, including Tam Ky-Nui Thanh coastal tourism complex (2,000ha), Tam Ky urban area (2,000ha), and Tam Hoa-Tam Anh urban area (2,240ha).
New opportunities for those with vision
According to Do Thu Hang, associate director of Research at Savills Hanoi, foreign investors show more interest in projects with clean land reserves due to limited opportunities in CBD.
They are looking to acquire projects from other developers or set up joint ventures with companies holding land reserves.
“There is a new wave of M&A among foreign investors to take over projects in non-CBD to create new markets. The infrastructure in the areas is nearing completion, such as the development of the metro system and the expansion of belt roads. If investors can establish a new market in non-CBD, they will earn a fortune in the future as pioneers,” Hang said.
“Opportunities to acquire land plots are limited in CBD of gateway cities like Hanoi and Ho Chi Minh City and coastal cities like Danang and Nha Trang. Investors now seek alternative investment in non-CBD for more land plots with reasonable prices. The move shows a vision for the future among institutional and individual investors. However, it is crucial for them to acquire projects with full legal status and improved infrastructure to give relief to potential homebuyers,” she added.