The prolonged international focus on Da Nang as the host of this year’s APEC Economic Leaders’ Week has boosted the city’s brand value, and the local real estate sector will benefit accordingly, experts say.

CocoBay resort under construction in the city. — VNS Photo Cong Thanh

In its survey of Da Nang, property consultancy firm Savills Viet Nam remarked that the city's already strong tourism growth would get a further boost, and its warm climate, golden beaches and rich culture would attract more visitors to local resorts and hotels.

The report said the city had seen a first half GDP growth of 8.1% compared with the same period last year.  FDI inflows increased by a stunning 269.5% with about 14.3 million US$ disbursed.  Credit growth in the first half reached a 6-year high of 7.5%. The hospitality boom continues as more international and domestic flights are added, and major hospitality brands jostle to enter the market.

Tourism is a driving force for the city's economy.  Between January and June the number of tourist arrivals jumped by 33.2% against the same period last year to hit over 3.2 million.  Of this figure, the number of foreigners climbed by 72.2% to hit over 1.2 million, whilst domestic visitors increased by 17.1% to 2 million.

The opening of infrastructure projects for the APEC Summit, including the expansion of the city’s International Airport, and the tunnel at the intersection of the Dien Bien Phu-Nguyen Tri Phuong streets, will boost the city’s future growth.  Rapid expansion of resort projects along the entire coast gives Da Nang world class capacity to service northern Asian markets, the report said.

Ms Nguyen Thi Kim, the owner of the city-based Thien Kim Real Estate Transaction Centre, predicted a surge in the retail segment of the property market after the APEC Week.

“There are busy transactions of small hotels and apartment projects in the city while big property developers are likely to flock to the city seeking investment chances in large resorts and apartments," she told Viet Nam News.

More of the same: Property companies are developing more resort and entertainment projects. — VNS Photo Cong Thanh

The sales are likely to increase as small investors speculate on a surge.  More investors from Ha Noi and HCM City are likely to go to Da Nang to conduct their suvery activties into the city's market.  If they do well, they are predicted to pour more money into big projects.

“There is a slight change in small and little projects.  Investors are developing entertainment and resort projects in coastal areas in Dien Nam-Dien Ngoc near Hoi An city, including Cocobay, Sheraton, Vinacapital.

Ms Kim said some investors still hesitated to pour money into big transaction as they waited for official reports on the inflation rate and finance from state agencies

Surge: A beach resort is opened in Da Nang. — VNS Photo Cong Thanh

The Savills report said the real estate market would continue to remain robust, despite the likely demise of the Trans-Pacific Partnershi, adding that the Regional Comprehensive Economic Partnership (RCEP), involving China, as well as membership of ASEAN and the Viet Nam-EU Free Trade Agreement, would be important drivers for continued investment.

The report said that there was considerable interest from foreign investors, given the nation’s strong GDP growth, a relatively stable currency, young demographic, rapid urbanisation, as well as rapid growth in the domestic consumer market driven by one of the fastest growing middle classes anywhere in the world.

This interest is fuelling investment across all real estate sectors from industrial to office and residential to retail.  In addition, the rapid growth in tourism arrivals, both foreign and domestic, is creating a boom in the hospitality sector.

While interest remains strong from Japan, Korea, Singapore and increasingly, China, foreign investors still find it challenging to identify quality real estate investments with clear ownership.  The report said transactions involving operating assets would remain scarce and that most would involve development projects.  Many foreign developers sought to secure long term partnerships with local counterparts.

According to Pham Thai Binh, the Head of the retail department at Savills HCM City office, said Da Nang, and Central Viet Nam as a whole, were yet to become a booming market because local spending habits were thrifty and young people hesitated to shop for luxury brands.

Despite the introduction of luxury malls like Vincom and Parkson, they serve more as entertainment and cuisine centres rather than shopping centres, he said

Da Nang is yet to be identified as a key market in the development plans by luxurious fashion brands like Zara, H&M, Uniqlo, but in the next 5 years, the city could be a favoured shopping centre, when the two major markets of Ha Noi and HCM City are saturated, Binh said.

He said Le Duan Street, a popular shopping hub, would continue to be a major destination for retail and shopping investors.

According to Savills, Da Nang will become a magnet for a series of fast-food brands, including McDonalds, Phuc Long, Lotteria and Kentucky.

(Source: VNS/ DA NANG Today)