Foreign capital is flowing into the tourism real estate market of Vietnam but international experts say Vietnam hasn’t removed barriers for foreign investors so some investors intend to turn their backs on the Vietnamese real estate market.
According to Phan Huu Thang, Head of the Foreign Investment Agency under the Ministry of Planning and Investment, there are 8,737 projects investing in the tourism real estate market, worth around $104 billion. Capital flows from South Korea, Japan, Taiwan, Singapore, Malaysia, Russia and some North European countries are pouring into this market because they think it has potential. Yet, many barriers still exist.
Vietnam and its own price policy
Marc Townsend, Executive Manager of CBRE Vietnam, an estate service and consulting group, said Vietnam, thanks to its geographic advantages and a long coast, is one of the alluring destinations of tourism real estate investment in Asia. Nevertheless, land prices in Vietnam are too high compared to neighbouring countries and this is one of the largest hindrances for the growth of the tourism real estate market and the foreign capital flows in this area.
“If our company plans to invest in Vietnam, we will carefully study this market and compare land prices in Vietnam and those of nearby countries. Many investors have made comparisons and if land prices stay at the current high levels, I’m afraid that the competitiveness of the Vietnamese tourism estate market will decrease and some investors will turn their backs on Vietnam,” said Marc Townsend.
Sharing this point of view, Kenneth Atkinson, Executive Manager of Grant Thoron Vietnam, said real estate prices in Vietnam are too “tense” now and Vietnam has its own prices.
“To have land for construction, investors have to pay huge sums. There are a handful of local investors who are able to join the market. Most of them are doing business by banking loans. Meanwhile, to achieve its goal of controlling inflation, the Vietnamese government is tightening credit for real estate traders. By chance, this easy prey runs to the pockets of some foreign groups,” Atkinson warned.
A lot of challenges
At a recent forum on opportunities for investment in tourism real estate held by Phu Quoc Land company, many investors expressed their expectation that land prices would become reasonable and more competitive thanks to the current fall of the real estate market. However, they are still afraid that poor infrastructure and complicated administrative formalities will obstruct the development of the tourism real estate market.
A foreign investor said he had been interested in tourism projects on Phu Quoc Island in the southern province of Kien Giang, but after some surveys he decided to quit because of difficulties in travelling. There is only one flight every three days to Phu Quoc Island.
Marc Townsend said to have land, investors need 3-4 years. Then they need around 3 years more for site clearance. Investors are too tired after such a long time to get “clean” land in Vietnam and that time can cost them business opportunities.
Let’s have a look at the neighbours!
“Your country is very beautiful! Vietnam is very charming and rouses my curiosity. But I have been to Vietnam only one time and I don’t want to return. Everything in Vietnam is so expensive. Many people love to stay in five-star hotels, but I don’t because it is too expensive,” a foreign visitor said.
The director of a private real estate consulting company said hotel rates in Vietnam are too high compared to the region and the world. One night at a five-star hotel in Vietnam is around $200/room and up to $230-250/room at some hotels. Meanwhile, the best hotels offer $129/room/night, for example, in Kuala Lumpur, Malaysia.
The situation should not be blamed on the high number of visitors or the modest number of hotels. Vietnam has more than 9,000 hotels at present and by 2010, the country will have around 13,500 hotels with a total number of up-to-standard rooms around 270,000, he said.
According to specialists, most hotels and resorts in Vietnam allege improved service quality to push up room rates, without looking at neighbouring countries. This year Vietnam expects to welcome around 5.5 to 6 million foreign visitors but this volume is equivalent to that of Thailand in 1983.
High prices are not for hotel or resorts but also for offices and apartments for lease. It is very difficult to find apartments for lease at reasonable prices in some districts in HCM City. Meanwhile, the charges for leasing retail shops have risen highly in central areas in big cities like Hanoi and HCM City. Many multinational groups can’t afford to hire one sq.m of land at $50.
According to Phan Huu Thang, Head of the Foreign Investment Agency under the Ministry of Planning and Investment, there are 8,737 projects investing in the tourism real estate market, worth around $104 billion. Capital flows from South Korea, Japan, Taiwan, Singapore, Malaysia, Russia and some North European countries are pouring into this market because they think it has potential. Yet, many barriers still exist.
Vietnam and its own price policy
Marc Townsend, Executive Manager of CBRE Vietnam, an estate service and consulting group, said Vietnam, thanks to its geographic advantages and a long coast, is one of the alluring destinations of tourism real estate investment in Asia. Nevertheless, land prices in Vietnam are too high compared to neighbouring countries and this is one of the largest hindrances for the growth of the tourism real estate market and the foreign capital flows in this area.
“If our company plans to invest in Vietnam, we will carefully study this market and compare land prices in Vietnam and those of nearby countries. Many investors have made comparisons and if land prices stay at the current high levels, I’m afraid that the competitiveness of the Vietnamese tourism estate market will decrease and some investors will turn their backs on Vietnam,” said Marc Townsend.
Sharing this point of view, Kenneth Atkinson, Executive Manager of Grant Thoron Vietnam, said real estate prices in Vietnam are too “tense” now and Vietnam has its own prices.
“To have land for construction, investors have to pay huge sums. There are a handful of local investors who are able to join the market. Most of them are doing business by banking loans. Meanwhile, to achieve its goal of controlling inflation, the Vietnamese government is tightening credit for real estate traders. By chance, this easy prey runs to the pockets of some foreign groups,” Atkinson warned.
A lot of challenges
At a recent forum on opportunities for investment in tourism real estate held by Phu Quoc Land company, many investors expressed their expectation that land prices would become reasonable and more competitive thanks to the current fall of the real estate market. However, they are still afraid that poor infrastructure and complicated administrative formalities will obstruct the development of the tourism real estate market.
A foreign investor said he had been interested in tourism projects on Phu Quoc Island in the southern province of Kien Giang, but after some surveys he decided to quit because of difficulties in travelling. There is only one flight every three days to Phu Quoc Island.
Marc Townsend said to have land, investors need 3-4 years. Then they need around 3 years more for site clearance. Investors are too tired after such a long time to get “clean” land in Vietnam and that time can cost them business opportunities.
Let’s have a look at the neighbours!
“Your country is very beautiful! Vietnam is very charming and rouses my curiosity. But I have been to Vietnam only one time and I don’t want to return. Everything in Vietnam is so expensive. Many people love to stay in five-star hotels, but I don’t because it is too expensive,” a foreign visitor said.
The director of a private real estate consulting company said hotel rates in Vietnam are too high compared to the region and the world. One night at a five-star hotel in Vietnam is around $200/room and up to $230-250/room at some hotels. Meanwhile, the best hotels offer $129/room/night, for example, in Kuala Lumpur, Malaysia.
The situation should not be blamed on the high number of visitors or the modest number of hotels. Vietnam has more than 9,000 hotels at present and by 2010, the country will have around 13,500 hotels with a total number of up-to-standard rooms around 270,000, he said.
According to specialists, most hotels and resorts in Vietnam allege improved service quality to push up room rates, without looking at neighbouring countries. This year Vietnam expects to welcome around 5.5 to 6 million foreign visitors but this volume is equivalent to that of Thailand in 1983.
High prices are not for hotel or resorts but also for offices and apartments for lease. It is very difficult to find apartments for lease at reasonable prices in some districts in HCM City. Meanwhile, the charges for leasing retail shops have risen highly in central areas in big cities like Hanoi and HCM City. Many multinational groups can’t afford to hire one sq.m of land at $50.
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