Danang and Hoi An

Whilst Vietnam’s urban centres of Hanoi and Ho Chi Minh have put the country firmly on the map for international real estate investors in recent years, its resort sector has lagged far behind regional competitors Thailand, Malaysia and Indonesia. Despite the tourist lure of the iconic China Beach in the country’s tropical central coast region, until recently Indochina Land’s pioneering Nam Hai development in Hoi An was pretty much the only luxury residential villa option available. That is now rapidly changing with the launch of the same company’s Hyatt Regency and several other developments on the horizon. These mark the beginning of Danang City and its adjacent beach town Hoi An, ambitions to rival Phuket or Bali for investors attention.

“The area is rapidly developing on two fronts both Danang City as the capital and main economic centre and transport hub of the central region as well as a coastal beach resort and hotel destination,” David Brunt, senior manager of CB Richard Ellis’ Danang branch says. “Hence offering increasing commercial and tourism investment opportunities in the future. There are many residential villa and condo projects slated for both the city centre and coast stretching from the son Tra Peninsular to Hoi An. The industrial zones are also being developed which are already attracting quite a few Japanese companies and the local authorities are targeting IT companies wishing to create a ’silicon valley’ in the central region of Vietnam.”

Three major projects are set to dominate the resort property scene for the next few years; Indochina Land’s Hyatt Regency, VinaCapital’s Danang Beach Resort and Serenity Holding’s Fusion Alya Hoi An development to be launched in the next few months. No information is currently available on Serenity’s project, but marketing efforts for Hyatt Regency and Danang Beach Resort are already in full swing.

“We acquired the site 18 months ago and have been working to develop a master plan and obtain all necessary approvals to proceed with the construction. We started the infrastructure and first golf course 12 months ago and the Ocean Villas six weeks ago.
The Greg Norman Golf Course will be completed in January 2010, and the villas will be officially launched in September 2009,” David Blackhall, deputy managing director of VinaCapital Real Estate says.

Danang Beach Resort comprises of a number of different parcels of land offering different products, such as two, three, four and five bedroom villas, terrace style townhouses and apartments that will front the golf courses, beach and other amenities. The residential products are a mixture of both freehold and leasehold title with a price range of $300,000 to $600,000.

“We have not officially launched yet, however we have anticipating strong demand and received many expressions of interest from buyers from all over Vietnam who have already heard about the Danang Beach Resort,” Blackhall says.

The Hyatt Regency offers two distinct residential components; condominiums and villas. The 174 luxury condominiums are spread out between four strategically located mid-rise buildings offering optimal view points. Virtually all condominiums benefit from direct sea-views. The 27 ocean-front villas are located on the southern portion of the site, each with three bedrooms, a pool and garden with outside covered lounge area. All villa residences are elevated to provide a superior vantage point to the sea. The properties can be sold in perpetuity to Vietnamese while foreigners can purchase through a tax-efficient off-shore structure which conveys the rights to a particular property for approximately 50 years. On exit, foreign purchasers will have the ability to transfer their interest to either a Vietnamese National in perpetuity or a foreign individual for the balance of the lease term.

“We have had strong sales confirming our belief that Danang remains an attractive investment destination and that investors remain keen to invest in well conceived projects by experienced developers,” Michael Piro, sales and marketing director of Indochina Land says. “With prices in our initial offering for one-bed-room condo’s starting for as little as US$200,000 it is no surprise that demand has been so strong.”

Both developers also feel that golf has to be an essential component of their projects and are each developing adjacent courses.

“History has proven that golf is a mandatory component to the success of a large scale resort destination,” Piro says. “The development of the Montgomerie Links Vietnam golf course is essential to our overall vision and development plan in Danang and we remain very supportive of VinaCapital’s 27-hole Greg Norman designed golf course. The existence of these well branded, internationally designed golf courses gives Danang the necessary tourism infrastructure to start to attract a new wave of affluent visitors which will ultimately drive demand for all resort related products in the area.”

However whilst the developers are achieving the highest standards, investors must be aware that the areas infrastructure whilst rapidly improving is still a work in progress.

“The Danang authorities are striving forwards with infrastructure projects and Danang has some of the best infrastructure in the country but they still have some way to go,” Brunt says. “Currently there is only one international airline operating direct flights to Singapore although more international airlines are likely to commence operation once more hotels and resorts open. It was recently announced that a Japanese airline intends operating flights from Osaka to Siem Reap in Cambodia via Danang. PB Airlines have recently suspended direct flights to Bangkok although flights are likely to resume on this route once the global economy improves. Work also continues on the east west economic corridor linking the coast of Mynamar with Danang via Thailand and Laos.”

With rapid growth seemingly round the corner, early investors should see benefits for years to come. Whereas other South East Asian resort property markets are already highly developed, Danang’s emergence offers buyers a chance to get in early.

We’re really on the ground floor for international resort property in Danang,” Matthew Powell, Hanoi branch director of Savills Vietnam, the Hyatt Regency’s marketing agent says. “So of course, Phuket and Bali are much more developed in terms of choices of property and other facilities. But that is why Danang is so interesting. I bet we all wish we had bought property in Phuket 15 years ago. Danang has all the necessary ingredients to become a successful resort location; the natural environment is spectacular, the beach itself is great and the local and national authorities are fully behind tourism development and doing a lot of promotion.”

Soundbytes:

The Danang authorities have been encouraging foreign investment and property laws are in the throes of change which may make it easier for foreigners to own property in Vietnam in the future. As WTO commitments are implemented and Vietnam further embraces the rest of the world, tourism will no doubt increase as the area develops with world wide marketing and the opening of more high profile resorts and tourism facilities and more direct international flights flying to Danang. David Brunt, CB Richard Ellis.

We have a long-term strategy in Danang; this is the second major project we have taken on in the area so we really believe in the location. I can see Danang being well and truly an established resort destination with a resort for everyone’s budget and style and the towns and beaches full of happy visitors in and out of restaurants and bars after a round of golf. I’ve put my hand in my pocket and secured my unit so I’ll be one of them! Matthew Powell, Savills Vietnam

Highlights

Fastest Growing GDP in Vietnam (13.3% in 2007)
Gateway to 1,450 km East-West Economic Corridor
Best Infrastructure –bridges and roads
Strong growth of Japanese, Korean and Taiwanese manufacturing companies in the 5 industrial zones.
Proactive investment policies and strategic location
Home of China Beach (1 of the top 6 most luxurious beaches in the world –Forbes Magazine 2005)