Currently, there are about 30,000 shop houses, townhouses and resort villas in the coastal tourist capitals of the country, at a cost of tens of billions of dong per unit.
A real estate company based in Ho Chi Minh City, which has many resort projects in Ba Ria – Vung Tau and Phu Quoc, showed that over the past 6 months, the purchasing power of townhouses, resort villas and coastal shophouses in the VND 15-20 billion segment has fallen to the lowest level in the last 5 years. Weak consumption results in inventory of over 90% of products, which is a huge burden for investors as it entails financial costs such as project development loans. In the second half of the year, businesses are expected to promote preferential and promotional programs when interest rates are lowered to eliminate the setbacks in the first half of the year.
Similarly, real estate companies listed on the Ho Chi Minh Stock Exchange have many resort projects distributed from the center to the south, confirming that the consumption of existing projects is very slow by the second quarter. For beach villas in the southern provinces, due to the cost of several million US dollars, the unit must be up to 95% of the basket.
Enterprises expect that the relief for settlements on the active allocation of land for sale in the near future will open up opportunities for adding resort land to the basket of products. Since the price of land is low and much cheaper than other resort properties with built-in structures on land, it will be possible to sell goods, helping to improve the prolonged stagnation.
Beach villa project in Phan Thiet. Image: Huu Khoa
The research and development department of DKRA Group warned that the total range of coastal real estate has increased to around 30,000 items. As for beach villas, by the end of the second quarter, the cumulative inventory was up to 15,000 units in both the north and south. In which 2,400 units were open for sale but have not been sold, and about 12,600 units are from the next phase of projects that are still available, have entered the real estate freeze phase, so they have not yet been able to enter the market.
In the segment of townhouses, beach shophouses, the stock until the end of June is also about 15,000 units. In which about 2,500 apartments have been opened for sale but not yet bought, and about 12,400 apartments belong to projects that have been announced on the market but are waiting, cannot be launched when the real estate crisis.
This division says townhouse and store transactions sold just 33 units in the most recent quarter, consumption down 97% year-on-year. Over 80% of major projects close the shopping cart to adjust sales prices and sales policies. Leaseback commitment, repurchase and interest rate support policies were widely applied but were not as effective as expected. In the face of cash shortages, many investors offer discounts of up to 40-50% for fast payments to quickly rebuild capital and also help increase liquidity.
Resort villas sold 50 units in the second quarter, consumption fell by 95% over the same period. The highest price for a product in the south is up to 72 billion VND per unit, the average price is about 30 billion VND per unit. In the North, the highest selling price is 28.8 billion VND per unit, and the popular price is about 15 billion VND. Transaction volume only happens locally across a few projects.
Notes VnExpressIn the first two quarters of the year, the resort real estate market continued to experience output bottlenecks, and transactions in large land assets stagnated, which extended the segment’s illiquidity cycle to almost half a century (from 2019 to the present), the longest compared to other types of real estate.
A report from the Vietnam Real Estate Brokers Association (VARS) also showed that high-end resort products (worth more than VND10 billion) saw almost no transactions in the second quarter as they had to compete directly with loss-cutting products previously purchased by investors with large inventories.
Investors still continue to apply the policy of commitment, profit sharing, interest rate support to stimulate market demand, but the effect is small. The sale price of holiday properties is generally the same in the first 6 months of 2023. The highest selling prices were for southern products, reaching almost VND 200 million per square meter. The North and Central regions cost about VND 80 million per square meter. VARS predicts that it will have to wait until the fourth quarter to see how resort real estate liquidity changes.
Wo Hong Thang, deputy director of research and development at DKRA Group, acknowledged that inventories of townhouses and beach villas until the second quarter are at alarming levels, but there is no solution to improve output amid the liquidity crisis in the real estate market as a whole.
According to Mr. Tang, the thawing mechanism of the real estate market will follow the direction of the recovery of residential real estate (serving basic consumer needs) in the first place in parallel with good economic growth. After people have saved up and have enough money, they think about resort real estate, which is understood as a second home, and not an object of first necessity.
As such, Mr. Thang predicts that it will take at least another 3 years for resort real estate to strike a balance and gradually show significant positive signals. In the near term, the entire market does not have hope for an acceleration in the second two quarters of 2023, and the liquidity of coastal assets is likely to continue to decline.
Wu Le