Da Nang realty gets a fillip from tourism growth

Absorption rate is the rate at which available apartments are sold. It is calculated by dividing the average number of sales by the total number of available apartments.

The report, prepared by Savills Vietnam, said sales were nearly three times higher year-on-year, while the supply of apartments increased 19% to 830 at three new projects.

The limited primary supply pushed average prices to VND40.8 million (US$1,800) per square meter, 28% up from the same period last year. Son Tra District accounted for a 68% market share.

Another major real estate service firm, CBRE, was also optimistic about the city market, saying the luxury apartments in Da Nang now cost the same as in downtown Hanoi and HCMC.

The tendency to buy property for leasing out is growing in the city thanks to the steady and high profits. CBRE said returns on apartments could reach a lucrative 12%.

It said for instance a one-bedroom apartment worth VND1.6 billion (US$71,100) fetches nearly VND15 million (US$667) a month and a two-bedroom apartment worth about VND3 billion (US$133,333), VND28 million (US$1,244).

At the same time, as one of the most beautiful coastal cities, Da Nang attracted a large number of tourists which helped develop its seaside tourism properties, especially in the hotel segment, Duong Thuy Dung, senior director of CBRE Vietnam, told the Vietnam Seaside Tourism Real Estate Forum held recently in Hanoi.

By 2020 the number of rooms available at hotels, condotels and villas is expected to double in response to the surging demand, she said.

In the first half of this year the city received more than four million visitors, up 24.5% year-on-year. They included 1.6 million international arrivals, an increase of 32%.

The Savills report concurred, saying tourism made the condotel segment profitable and pushed up the average selling price to VND47.6 million (US$2,100) per square meter, up 19% from the same period last year.

The firm said tourism made the condotel segment profitable and pushed up the average selling price to VND47.6 million (US$2,100) per square meter, up 19% from the same period last year.

The 109 three- to five-star hotels in the city had 12,900 rooms with another 1,400 to be added in the second half of this year, according to Savills.

As for condotels and villas, Savills also saw higher absorption rates due to tourism demand. The condotel segment will see 1,570 new units come into the market, mostly from the Hongkong-based Empire Group.

In the resort villa segment, though the market did not record new supply, the steady demand saw an absorption rate of 86%.