Vietnamese tourism before 2020 was growing by 30 percent in the domestic segment and 15 percent in the foreigner segment year-on-year, leading to rapid construction of resorts, hotels and the birth of new forms of real estate like condotels (a mix between a condo and hotel).
Since the world was hit by Covid-19, however, project investors had to deal with massive profit loss, some failing to maintain contract deals with clients and secondary contractors, such as FLC Group JSC and Cocobay Vietnam.
Promotional image for a vacation paradise in Phu Quoc
Currently, condotel projects across the nation with a total estimated capital of VND100,000 billion (about US$4.3 million) are out of commission. They are mostly located in tourism-centric localities such as Hanoi, HCMC, Danang, and Ba Ria – Vung Tau.
On the other hand, the tourism segment of real estate is facing an oversupply and a lack of concrete regulations which points towards unsustainable development, according to the chairman of the HCMC Real Estate Association (HoREA).
Specifically, there are no guidelines on the conditions for raising capital, promoting planned projects for sales, nor is there a definitive contract form regarding condotels and other new forms of vacation homes, which could spell legal doom for future buyers.
Despite all that, investors since March have decided to resume construction on many coastal projects, showing their confidence in the tourism real estate segment.
Potential buyers looking at the diorama of future “smart town” Aqua City
For example, contractors of the NovaWorld Phan Thiet project in Binh Thuan have completed 95% of the work items and expect the project to be ready for handover in March.
Speaking about his decision to continue with the project, the General Director of Novaland Group said he had to thank the government’s efforts in pandemic control and issuance of favorable policies for real estate companies. The company would continue to invest in urban and tourism real estate as key segments.
The Ministry of Construction in an attempt to relieve financial burdens for the real estate market has allowed foreign individuals and entities to own tourism real estate in Vietnam, in the amended Law on Housing and Law on Real Estate 2014.
The newest statistics from HoREA showed 82,900 apartments, 28,100 villas, and 15,660 townhouses used for touristic purposes across the country.
