» » Injecting money in resort apartment – potentially lucrative but risky

The Ocean Villas, originally uploaded by Kiva.Dang.

Big investment capital, a long period for investment capital recovery, fastidiousness about clients, incomplete infrastructure and H1N1 flu pandemic are all factors experts have cited to suggest the tourism real estate market in Vietnam has a lot of potential but is unattractive at this moment.

Real estate experts have begun talking about the newly emerging tourism real estate market in Vietnam. However, while saying it has ‘potential’, they also say that the market contains a lot of risks.

General Director of Thu Duc Housing Development Company Le Chi Hieu said that the biggest problem in the investment in tourism real estate, especially resort apartments, is the big investment capital needed. Meanwhile, it takes investors a long time to get back investment capital because the luxury products are always fastidious about clients.

Hieu said that if investors cannot manage their capital well, their capital will be ‘buried’ for a long time in luxury resort apartments.

Moreover, Hieu has also warned that the overall tourism development plan may be spoiled by the small resorts, now called ‘mini resorts’, as they may lessen the attractiveness of the beaches as tourism sites.

Hieu has cited Phan Thiet city as an example. The city once had very beautiful beaches, but the view of the sea has been obscured due to the mushrooming of mini resorts.

Hieu said that resort apartments, which are common in developed countries, remain very new in Vietnam.

Meanwhile, Secretary General of the HCM City Real Estate Association Do Thi Loan said that poor infrastructure is the factor that may lessen the attractiveness of Vietnam’s tourism real estate market.

Loan said that Vietnam needs to have more means of transport to carry passengers like highways, international airports and 5-star cruises to tourism sites, thus helping shorten the distances of travelling.

“A lot of investors who have come to Binh Thuan province said that they loved the climate and the advantageous position of the area, but they would not return until an international airport had come,” Loan said.

However, Loan said that the potential of Vietnam’s tourism real estate market would be very big if it could overcome the current short-term difficulties – the H1N1 flu pandemic and the uncertainties with the global economy.

Meanwhile, foreign real estate service providers like CB Richard Ellis (CBRE) and Savills are optimistic about Vietnam, saying that it is now time for Vietnam’s resort apartment sector to begin gearing up.

Managing Director of CBRE Marc Townsend said that resort apartments now have the opportunity to become more bustling, especially as infrastructure projects across the country are being completed, providing better transport and connecting tourism sites.

Marc has predicted that the tourism real estate will see a big volume of products of up to 2,000 villas, apartments at resorts in north, south and central regions.

However, real estate developers said that injecting money in resort apartments does not always bring profit as the investment greatly depends on domestic and global economic conditions. Besides, it also depends on infrastructure development, weather, climate, services and local economic development strategies.

“The resort apartment market is now just the playing field of a few enterprises and finance groups which have powerful finance capability and are ready to go tough roads and conquer challenges,” a domestic real estate developer noted.

Source: VNE

Post a Comment