VNRE - This year ‘vacation home’ has been the new buzz term in Vietnam’s property circles as the country’s emerging nouveaux riche and property investors look past the cities to the coast in search of a new luxury lifestyle or simply capital gains.
As more and more people living in Hanoi and Ho Chi Minh City become dispirited by the inevitable rise in pollution, congestion and lack of green spaces in Vietnam’s main metropolises the second home market in ‘holiday destinations’ is starting to gather momentum.
More than a decade ago, when the national economy first started to achieve spectacular growth, some of the country’s emerging middle class snapped up property in weekend destinations such as Ba Vi, just 60 kilometres outside Hanoi. But at that time there was less concept of a holiday home per se. Such properties were purchased for simple retreats. Vietnam had no holiday villas where owners enjoyed professional hotel-standard services and top class amenities.
Now, as the real estate market has matured and living standards have much improved, Vietnamese think nothing of weekend sojourns. A new travel-savvy discerning middle class has spurned simple weekend retreats for basking at luxury resorts where the kids can splash in a pool while the parents enjoy a long, late breakfast at a four- or five-star resort.
With families travelling frequently and a cashed up asset-hungry middle class looking to invest in any kind of profitable venture, the inevitable development is a shift towards villa and condominium holiday properties.
Such complexes offer the best possible design with high-grade services in the ultimate locations – it’s hard to resist if you have the means. Owning a holiday home is now also something of a status symbol. You can indulge in satisfying weekend holidays throughout the year while keeping up with Joneses.
The logic is that the property is also an investment which will gain in value. Homeowners also know that the property will be well-cared for with a hotel management company overseeing day-to-day operations and year-round maintenance.
Developers are certainly keen to create the supply to meet growing demand for luxury resorts with villas and condominiums for-sale. Coastal areas such as Danang, Hoi An, Nha Trang, Phan Thiet and Vung Tau are the obvious targets for developers and property-hunters.
Vinpearl Danang Luxury Villas is now selling 39 villas incorporated into a resort that will also boast 209 hotel rooms. In Nha Trang, Song Da Thang Long Joint Stock Company is working on a development called Dragon Pia that will have 248 apartments of four-star standard for sale. This property will join Costa Nha Trang, which recently launched 244 condominiums for sales, helping to bring the coastal tourist city of Nha Trang to the forefront of second home development in Vietnam.
A few years ago, such developments were impossible. Property developers could not sell units within a resort to an individual by law. Now, there is room to manoeuvre. Vietnamese can own villas or condos within a resort with a red book that certifies their ownership. Or alternatively, property hunters can take on a 50-year lease, which is transferable. Foreigners can also buy into a villa or condo in a resort through what is known as a “co-investment approach”.
A villa or an apartment in a professionally managed resort can also prove to be an income earner for owners. The buyers can sign a contract with a hotel management company and lease out the property to tourists to earn rental income. Profits will be divided between the owner and the hotel operator. Normally, the profit is divided by half for the owner and half for the operator, as in The Nam Hai resort near Hoi An, or the about-to-be-opened Hyatt Danang Residences in Danang.
However, Vinpearl Luxury Villas in Danang is offering more incentives to prospective home owners by announcing owners will enjoy 85 per cent of profits from villa rental with the rest going to the hotel operator. Vinpearl Luxury Villas is also offering some enticing financial guarantees. Accordingly, developers will ensure that rental income of a villa over a year (and for the first three years of operation) will equal at least 10 per cent of the sale price.
Tran Van Tang, general director of Vinpearl Danang Joint Stock Company, said developers were confident in the profitability of the project when introducing such incentives. “Our policy is aimed at providing the best supports for buyers, creating confidence in our project,” said Tang.
Reported by Ngoc Son | MONRE