VNRE - The Ministry of Planning and Investment has requested local authorities to check the resort real estate development projects in their localities and report back to the ministry. The move has been understood by the public as the warning about the possible excess of the resort real estate projects.
The wave of developing resorts
Market surveys all show that in the past five years, the resort real estate market has been developing rapidly and going beyond the expectations of the management agencies.
Five years ago, there were only several resorts, namely Mui Ne Domaine (in Binh Thuan province), The Nam Hai or Olalani in Da Nang, and some in tourist cities of Nha Trang and Vung Tau. Most of them were foreign invested projects.
However, the market has welcomed a lot of new investors, both foreign and domestic, over the past five years. The investors hope for big profit.
According to CBRE Vietnam, a real estate service provider, by the end of 2010, Vietnam will have some 55 resort real estate projects which will provide 5318 villas and 6601 apartments.
The figures make people believe that the resort market has become too hot.
In the region, Thailand is considered to have developed resort marketvery early. However, in Phuket, a famous tourist site for the past 20 years, there are only 5624 resort villas and apartments. Meanwhile, in Vietnam there are already 3745 apartments and villas in the central region. In fact, the number of high grade apartments and villas there is even higher than that in Phuket, 253 vs 135.
General Director of CBRE Marc Townsend described the investment wave as the “tsunami” which has landed in Vietnam.
It seems that people now prefer injecting their money in real estate projects to other investment channels, such as gold or securities, because they believe that real estate development can bring larger profit.
More harm than good
An expert from CBRE said that it seems that Vietnamese real estate developers have been too busy to develop the number of villas or apartments, not paying much attention to the quality.
Once the supply far exceeds the demand and goes beyond the management capability, this will be a big trouble.
An official from the Ministry of Planning and Investment said currently Vietnam has nearly no more land left along the coast, especially the localities with good infrastructure such as Da Nang and Binh Thuan.
This seems to be the blunder made by local authorities in the past. They hurried to call for investment by allocating beautiful land plots. many investors were allocated the land, even when they were not capable of carrying out their projects.
Under the current regulations, investors have to obtain permission from the Government only if their resort projects cover more than two hectares. Therefore, investors only register the projects with less than two hectares. As the result, the beautiful seaside has been divided into small plots.
The excessive development of the resort real estate sector, according to experts, may do more harm than good. Investors should be informed that the number of foreign guests and secondary investors is not has high as expected, as only 15 percent of resort real estate projects have been sold to foreigners, according to CBRE.