Hospitality property: Time to appear on investor’s radar

25/12/2024, 11:04

Consumption rebound will drive VNM’s growth in 2025

VNDirect believes that Vietnam hospitality property will recover quickly in the future on the back of Covid-19 vaccines presence along with recovery of the Vietnam tourism. The headwinds from the pandemic may be over in the hospitality property market from end-2021.

New supply for beach villas picked up in 1H21

According to DKRA, new supply for beach villas gradually bounced with 1,019 units in 1H21, 88% higher than that in 2020, mostly from Ba Ria –Vung Tau, Phu Quoc, Binh Thuan. Demand is still dull with only 300 units but higher than 270.3% yoy in sales volume, translating into a take-up rate of 29%.

VNDirect expects a recovery to 2019 level in 2023, driven by the bounces of international visitors. All countries around the world are stepping up their immunization efforts to combat the COVID-19 pandemic. Several countries stand out for rolling out vaccination, of which Canada has the highest percentage of the population (61.6%) vaccinated with at least one dose of the COVID-19 vaccine, following by the UK (59.4%), US (50.9%), Germany (45.1%), Italy (43.1%), France (41.2%) and China (estimated at 36.0%).

According to Vietnam National Administration of Tourism, the path to recovery for Vietnam’s tourism will follow four stages: (1) recovery led by domestic tourism; (2) pilot reception of limit ed international tourist groups in certain tourist sites; (3) reception of visitors from countries with good progress in Covid-19 containment; (4) full recovery of international tourism. Currently, VNDirect sees Vietnam entering the second stage with approval for Phu Quoc to welcome foreign tourists having vaccine passports in mid-June.

On 13 Jun 21, the Politburo has approved for Phu Quoc to welcome foreign tourists with vaccine passports. This will boost the recovery of hospitality performance in this island from 2H21F. Vingroup – one of the largest developers in Phu Quoc – will benefits the most to recover strongly with on-going Vinpearl projects and the upcoming launch at Grand World project.

By Jan 2021, Phu Quoc has gained 372 hospitality projects with total investment value reaching US$16.5bn.

Before COVID-19 pandemic caused, VNDirect sees a lot of potential for Phu Quoc hospitality property on the number of domestic and international visitors to this island rising impressively over 2015-2019, with domestic arrivals CAGR of 49.8% and international arrivals CAGR of 35.2% over 2015-2019. Many developers such as Vingroup and Sun Group seize opportunities to invest in this island. According to the Management Board of Phu Quoc Economic Zone, by Jan 2021, Phu Quoc has gained 372 hospitality projects with total investment value reaching US$16.5bn.

Especially, Phu Quoc has become Vietnam’s first island city in early-2021, therefore, real estate in this island remains healthy with land prices continuing to rise despite COVID-19. With the recovery from tourism, VNDirect believes hospitality property in Phu Quoc has much room for growth post pandemic.