Phu Quoc island has inventory of nearly 18,000 beachfront properties

According to real estate consultancy DKRA Vietnam, Phu Quoc had an inventory of over 17,600 beachfront properties.

There has been no new supply of condotels this year, and the secondary market too has remained frozen.

The market slump and large inventories were mainly due to oversupply and their undistinguished nature of most properties, according to experts.

Phu Quoc has 286 tourism investment projects on a total area of 9,600 hectares and with an investment of VND375 trillion (US$15.9 billion).

Of them, 47 are fully built, 78 are under construction and the rest are completing investment procedures, according to the Phu Quoc Economic Zone Management Board.

According to DKRA, since 2017 the development of tourism projects has outpaced the increase in tourist numbers. Supply has been increasing by an average of 70-80% annually.

Over 4,000 beachfront properties were launched in 2019, nearly five times the previous year’s figure. Mauro Gasparotti, director of Savills Hotels Asia-Pacific, said the oversupply in Phu Quoc, especially of commercial townhouses, is worrying.

Besides, most of the properties have no distinguishing features, with many aping European architectural styles and failing to attract foreign tourists, he added.

Huynh Quang Hung, chairman of the Phu Quoc People’s Committee, admitted that in the past the city only focused on developing four- and five-star hotels and resorts, offering few choices for ordinary travelers.

Now there are some 14,000 hotel rooms in the mid-priced and high-end segments, or nearly 50% of the total number on the island, according to Savills Hotels.

Vo Hong Thang, deputy director of R&D at DKRA Vietnam, said even in the high season, boutique hotels, villas and mini hotels have occupancy rates of only 28-32%, with domestic tourists accounting for the majority.

He said if the occupancy rate is below 30% the profit margin would only be 0.5-1%.

He did not expect the Phu Quoc beachfront property market to recover for at least another three years.

In the short term it will be difficult for investors to make money in the city because of the large inventories and high costs. But in the long term the market is promising, he added.