Resort properties find no takers in Da Nang

The resort real estate segment in the city and its surrounding areas was almost "frozen," the company said in its first quarter report. No new projects were launched, it added.

According to a report by the Vietnam Association of Realtors, low liquidity in fact plagued the segment right across the country, with only 160 resort real estate transactions completed in the first quarter, a consumption rate of 2%.

Yet, DKRA said, prices barely fell from their high levels.

Beach villas in Da Nang were priced as high as VND100 billion (US$3.93 million) and beach townhouses, VND7-16 billion. Beach condotels were listed at VND148 million per square meter.

Vo Hong Thang, director of consulting and project development at DKRA Group, said demand for resort real estate is very low.

Developers have rolled out a number of incentives to spur demand, such as reducing interest and extending payment terms, but in vain, he said.

Additionally, investors have lost confidence in the resort real estate segment as many ongoing projects have been delayed, some even abandoned, due to a lack of funding, he added.

Concurring, Tran Trong Vu, co-founder of SPE.R, a research and survey unit specializing in the central Vietnam real estate market, said investors are turning away from the segment after many projects failed to deliver the profits promised by developers.

An example is a resort project in Hoi An that was launched in 2019 but only put on sale recently, he said.

The developer had claimed it would fetch buyers a yield of 8%, but the segment is only making 1.8-2.7% profits, he said.

Very few manage 5% profits, while many are operating at losses, he said. Promises of high rates of return were what attracted investors to the segment in the first place.

But now that developers are failing to fulfill their profit commitments, investors no longer have confidence in the market.

Looking toward the rest of the year, experts said there would be no new resort project in Da Nang since demand is unlikely to improve.

Resort real estate is no longer a good investment choice in Da Nang, Vu said. The best properties in the coastal city are apartments since they could be rented out for steady cash inflows, he said.

Some apartment projects launched this year at around VND27 million per square meter have been selling quite well, he said.

"Rental properties that can generate over 4% of the purchase price per year are also in demand."