Positive signs from Danang’s real estate market
Being graced with one of the most beautiful beaches in the world and located in proximity of world-famous cultural relics, namely the old citadel of Hue, the old streets of Hoi An and the holy land of My Son, Danang has attracted millions of domestic as well as foreign tourists.
According to data released by the Danang Department of Culture, Sports and Tourism, the number of tourists coming to Danang has been on a continuous increase, from 3.8 million in 2014 to 4.6 million in 2015, surging by 24%. 30% of these visitors are foreign tourists and the city’s total revenue from tourism in 2015 was about VND12.7 trillion (US$570 million), up 28.7% on-year.
Just during the recent Lunar New Year, Danang welcomed 222,000 tourists, 79,200 of whom were foreign, up 16.7% compared to last year’s Lunar New Year. Domestic tourists numbered 142,900, up 24.4%, signifying positive developments on both fronts.
As the city expects 5 million tourists in 2016, 1.32 million of which being foreign tourists, and a total tourism revenue of VND14 trillion (US$630 million), real estate developers and investors are therefore seizing every opportunity to capitalise on this increase.
According to Savills Vietnam’s data, in the third quarter of 2015, the supply of three to five star hotel rooms in Danang was 7,573 rooms, up 7% on-quarter. The rent rate increased by 3 percentage points to 77%.
The renting price of rooms is up 8%, while revenues increased by 13% on-year. The renting price and the revenues rose in all classes of rooms, both annually and quarterly. A shortage of rooms is not unusual, especially during public holidays.
The city’s government has recently gone on a spree of infrastructure development and encouraged investment into hospitality.
In order to meet the increasing demand for high class rooms, the government is prioritising developing infrastructure in the central areas of the city where high class hotels are built.
A costly place in the sun
According to the owner of a small private hotel on Bach Dang street near the Han River, the hotel has a room filling rate of 80-90% all throughout the year. During the summer months and public holidays, it frequently sees a shortage of rooms.
The locations along the riverbanks in the city centre and near the beach thus are considered very attractive by developers.
They are also the most suitable places to build high class hotels in Danang as they are close to famous bridges and are within an arm’s reach of all the best Danang has to offer.
The price of land in these areas is very high. For instance, on Bach Dang street a square metre fetches about VND150-220 million (US$6,700-US$9,800).
In this context, Sun Group’s Euro Village project is competitive not only in quality and scale but also in price. The location is rare, with room views both on the Han River and the sea, near the Dragon Bridge, and only 500 metres from My Khe beach.
The project’s ideal location is also likely to profit from numerous free tourism products that are expected to attract millions of visitors, such as the Happiness Bridge that is currently being constructed and the cruise port.
The land plots reserved for the Euro Village project’s hotel buildings are 300-600 square metres in area. The price of the land is VND35-40 million (US$1,600-US$1,800) per square metre, which is very competitive compared to the VND150-220 million (US$6,700-US$9,800) on Bach Dang street, on the opposite bank of the river.
Owning a land plot in this project is thus a smart investment choice in the context of increasing demand for hotel rooms in the city.
With the ever-increasing number of tourists visiting and events of an international scale continuously refreshing the city’s cultural and tourism scene, Danang is strengthening its position as the top tourism destination in Vietnam.
A constructive policy environment to encourage investment and clear procedures are additional important factors that make the city attractive.