A luxury home away from home

VNRE - The super-rich now see holiday homes as the ultimate asset, hence a spate of luxury villa projects are now shooting up throughout the country.

The second home market in Vietnam is clearly buzzing with a number of large-scale projects being developed by ambitious investors hoping to cash in on the growing demand for a holiday home.

Several developers have had their sights set on this market for some time. Gia Tue Investment Joint Stock Company announced three years ago it would develop Galaticos Living in Dalat with nine super luxury villas selling for at least $2.8 million per unit.

At the time few buyers could afford such a staggering price tag, but now the project is deemed feasible buoyed by the surge in second home development all over the country. From the former hill station town of Sapa in the north down to the beachside cities of Nha Trang, Phan Thiet and Vung Tau in the south, developers seem convinced this segment is ripe for the picking.

That’s down to Vietnam’s property-hungry elite, who now see a holiday home as the next vital asset, after purchasing villas, condominiums and stately cars closer to their primary home.

Initially, when second-home projects were first tabled, developers anticipated huge interest from foreigners. Six years ago, The Nam Hai resort between Hoi An and Danang offered holiday villas for sale at prices from $500,000-$700,000 per unit. All of the purchasers were foreigners. To buy the property essentially they bought “into the company” by purchasing shares.

Now, Vietnamse buyers dominate. Two Danang-based projects, Hyatt Regency Danang Resort and Spa and Ocean Villas (Danang Beach Resort), were last year promoted with sales and marketing campaigns in Hong Kong and Singapore. But in the end, most of the buyers were Vietnamese residents with 80 per cent based in Hanoi.

The projects’ success with residents of the capital is not because more Hanoians have the necessary means. Ho Chi Minh City people were just more interested in villa projects further south in locations such as Ba Ria-Vung Tau and Binh Thuan provinces.

Investment or status symbol?

Developers of such projects like to stress that buying a home is not just for holiday-making families with money to burn. It’s also an attractive investment channel as owners can either lease products out during the year or sell them at higher prices down the line.

But the reality is that investing in a townhouse in Hanoi or Ho Chi Minh City or another large city has more potential as an investment. Purchasing a multi-million dollar holiday villa satisfies purchasers’ desire to own a super-luxury property. In terms of status, it’s now the ultimate asset after a penthouse apartment in downtown Hanoi or Ho Chi Minh City.

“A Motorola mobilephone was considered a luxury several years ago,” says Tran Minh Hoang, chairman of Gia Tue Investment Joint Stock Company. “Now owning a tourism property is the same. It was strange for Vietnamese people in the past, but now it’s becoming popular as the economy develops. People purchase a holiday villa to show off their position or rank and wealth.”

Million-dollar babies

A villa belonging to Hyatt Regency in Danang was sold for $1.2 million last year and is now valued at $1.4 million. The lowest price at Ocean Villas was $400,000 for one villa. Seafront villas at Furama Villas, Ocean Villas or Hyatt Regency are all valued at around $2 million per unit. Hyatt Regency sold 20 of its 27 three-bedroom villas, while Ocean Villas has sold off about 90 per cent of its villas during its first three launches.

“Purchasers are not concerned much about the price,” says Le Minh Phuc, general director of VinaCapital Danang Golf Course Company, developer of Ocean Villas. “They only care that the villa has a prime location, looking out at the sea, the golf course, or the river. Villas with no beautiful view don’t attract customers.”

Part of Vietnamese society has enjoyed a spectacular ascent to unprecedented levels of affluence. Once, developers of urban condo-projects such as the Manor or Pacific Place in Hanoi, believed sales would be dominated by foreign buyers, but the majority of owners are Vietnamese.

Downstairs in the car parks of such properties you will find extravagant purchases – it’s not unusual to see a Rolls Royce or Bentley on the streets of Hanoi or Ho Chi Minh City now. So will these high-fliers also have a holiday automobile parked outside their holiday home? How else would they drive to town in the midday sun?

Reported by Ha Linh/ MONRE