Can tourism recovery 'rescue' resort real estate?

The tourism industry has recovered strongly.

According to information from the National Tourism Administration, after the first 9 months of 2023, international visitors to Vietnam reached 8.9 million, 4.7 times higher than the same period in 2022. With the early completion of the target, the Ministry of Culture, Sports and Tourism recently proposed raising the target of international tourists to Vietnam in 2023 to 13 million, an increase of about 156% compared to the plan set at the beginning of the year.

South Korea continues to be the leading market sending visitors to Vietnam with 2,584,840 arrivals, followed by China with 1,122,572 arrivals. Some localities with tourism service revenue in the first 9 months of 2023 increasing compared to the same period last year are Da Nang up 139.9%; Quang Ninh up 98.8%; Ho Chi Minh City up 91.3%; Hanoi up 67.4%; Hai Phong up 50.9%; Can Tho up 39.6%.

The number of domestic tourists has also reached 93.5% of the yearly target, and is expected to reach and exceed the target of 102 million visitors from now until the end of the year. At the same time, Vietnamese tourism has been continuously honored by the international community when it became “Asia’s Leading Destination” for the 5th time and won the “Asia’s Leading Natural Destination” award for the 2nd time in a row.

To continue promoting the tourism market, events and festivals in tourist provinces and cities have been continuously organized since the beginning of the year and will last until the end of 2023. Thereby attracting more international tourists to key tourist destinations in Vietnam such as Nha Trang, Phu Quoc, Da Nang...

The tourism industry has had a strong recovery in recent times, although it has not yet returned to pre-pandemic levels.

With the above positive signals, many investors have also expected that resort real estate will develop again. However, according to a recent Savills report, the recovery of hotel business activities in Vietnam is uneven. The occupancy rate and average room rates of hotels in Ho Chi Minh City are gradually recovering to pre-pandemic levels. Meanwhile, resort markets such as Nha Trang - Cam Ranh, Da Nang and Phu Quoc are still facing many challenges in improving room occupancy.

In the first nine months of 2023, the Asian tourist market is still 33% lower than pre-pandemic levels. Oversupply in some destinations, while key international tourist markets such as China and Russia are recovering slowly, is adding pressure to the recovery process of the resort industry.

Mr. Mauro Gasparotti, Director of Savills Hotels, commented: “The problem is not just the overdevelopment of some destinations. Rather, it stems from the creation of products that are not suitable for market conditions. The growth of the tourism industry, especially international demand before the pandemic, has promoted the development of resort real estate in general and hotels in particular. However, some investors rushed into the market without thorough research during the planning process, leading to a gap between supply and demand in some destinations...”.

Resort real estate market continues to move sideways

The imbalance between supply and demand in the resort real estate business has caused the profitability of some projects to be significantly low in recent times. This has also caused the confidence in this market to not be restored, making liquidity still unable to improve.

Meanwhile, the supply of this market continues to increase despite the large inventory. According to a report by the Vietnam Association of Realtors (VARS), in the third quarter of 2023, the country had about 16 tourism and resort real estate projects for sale, providing about 970 products to the market, double that of the previous quarter. The supply is mainly concentrated in the Central and Southern regions.

In addition, the market liquidity for resort real estate is also low, leading to an absorption rate of only 1/10 of the same period in 2022 when it reached 23%, equivalent to 225 transactions. With the amount of inventory, mainly resort villa products with high prices, it is difficult to liquidate, causing the market to remain sideways, without many fluctuations in recent times.

Resort real estate has yet to regain investor confidence.

VARS also predicts that in the coming time, transactions will improve but the number will not be much and there will be differentiation between product lines. Condotel transactions are expected to have the highest increase because the primary supply of this segment has returned after a long absence from the market.

Regarding solutions for the resort real estate market, Mr. Nguyen Van Dinh - Chairman of VARS said that in the short term, it is necessary to speed up and shorten the delay of regulations on ensuring the rights and interests of secondary investors when participating in resort real estate investment projects to create peace of mind for investors. In the long term, the legal issues of resort real estate stipulated in the laws need to be unified and promulgated soon.

"The market will be opened up when the legal system is clear, consistent, and clear, ensuring the rights and legitimate interests of all participants. Especially for resort real estate, the amount of capital that developers and investors spend when participating in this market is often larger than in other markets," said this expert.

Source: https://www.congluan.vn/du-lich-phuc-hoi-co-giai-cuu-duoc-bat-dong-san-nghi-duong-post271325.html