Mr Rudolf Hever, the Director of Savills Hotels, Asia Pacific, recently remarked that Viet Nam’s real estate market is growing strongly, thereby stimulating domestic and FDI investment inflows into tourism properties.

A view of the city with condotel projects

According to the Savills Hotels’ representative office in Da Nang, the city’s tourism real estate market, especially the condotels segment, is now thriving and it will continue its upward trend in the years ahead. 

Over recent years, there has been a significant increase in the number of tourists arriving in the city.  In 2016, the number of foreign visitors to the city increased by 33% to hit about 1.7 million against the previous year.  In addition, the city’s transport infrastructure has been improved remarkably, and many preferential visa policies for foreign visitors have been issued by the national government.  These positive signs have helped to stimulate many investors from both home and abroad to pour their money into new tourism real estate projects, especially condotels.

Condotel project developers often use investment capital for their projects through a sale-leaseback transaction with their offered-property owners.  The owners buy a fully serviced condominium as a vacation home, but then offer it for short-term rentals on a hotel-type basis.  Since appearing in the Vietnamese market, this real estate model has become the latest craze in the domestic real estate market because of its highly competitive advantage and its appealing profitability.

Most notably, the growth rates of luxury hotels and resorts and mid-scale ones in the city are likely to be 30% and 27%, respectively over the next 3 years.

As of late March, 10 condotel projects offering a combined total of 3,901 rooms have been put into use in the city.  Included are around 1,950 units in Son Tra District and 1716 in Ngu Hanh Son District.  The seaside city is expected to see a 3-fold increase in the number of local condotel projects by the end of next year.

However, some domestic real estate experts have warned potential buyers to carefully research the financial capacity and reputation of the condotel projects’ developers before making their purchase decisions.  Their focus should be on carefully checking the quality of the condotel projects, their favourable geographical positions, their potential profitability, and their legality.