Homestay sellers find few takers despite fire-sale prices

Minh, 35, of Hanoi recently put up for sale her two-hectare homestay with 400 square meters of residential space in Hoa Binh’s Cao Phong District for VND14 billion (US$593,000).

After two months without a buyer in sight she lowered the price to VND12 billion, but to no avail. She had spent VND16 billion ($678,000) on buying land and building two houses on stilts, erecting more than a dozen tents and landscaping.

After nearly two years she has yet to recover her investment and has to pay bank interest out of her pocket since the income from the place is just enough to cover expenses.

"When I first invested money, I dreamed of a country house for both living in and renting out," she says. "Now I am completely disillusioned because the return is lower than the interest on bank deposits."

In Hoa Binh’s Luong Son district, a homestay with a total area of 6,000 square meters, including 400 square meters of residential land, is being offered for VND15 billion.

A real estate broker says the owner is selling it because of financial pressure.

A 7,000-sq.m property with 200 square meters of residential land in in Hanoi’s outlying Ba Vi District is also being offered at a cut-rate price.

This owner too is under financial pressure, and lowered the price from VND14 billion to VND9 billion. "But it is difficult to sell," a broker says.

Hai, a broker in Hoa Binh, says since the end of last year the number of homestay and resort owners asking to sell out has increased dramatically, and almost doubled between the middle of last year and the beginning of this year.

Many accepted price cuts of 10-20%, he says. "In the first half of this year I could not sell any."

Hoa, a veteran property investor, says most owners who are selling their properties are inexperienced investors.

But he admits even some experienced investors face difficulties because bank lending rates have shot up unexpectedly to 12-14 percent.

It takes a homestay at least five years to break even, and economic difficulties prolong the period, he says.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, says resort and homestay development requires great professionalism, knowledge of cash flow management, business operation, and customer service, but many investors "just buy a plot of land and build a house for rent."

As a result, in many places, more than half the village or commune is engaged in developing homestays and resorts though the number of tourists is small, he says.