Vietnam's hospitality property market looks positive

The new supply of hospitality property was mostly from Phu Quoc, Binh Thuan, Ba Ria–Vung Tau, Quang Ninh. Photo: Ba Ria–Vung Tau

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The General Department of Tourism reports that the total number of domestic visitors reached 60.8 million in the first half of 2022, an increase of 1.3 million over the pre-pandemic level in 1H19 and 1.9 times above its level in 1H21. In particular, in just the first half of this year, the number of domestic visitors exceeded the Government's target of 60 million for the entire year of 2022. According to GSO data, Vietnam received 601,982 more tourists in 1H22, an increase of 582.2% year over year, but still just 7% of the pre-pandemic level in 1H19.

Mr. Chu Duc Toan, a senior analyst at VNDirect sees the landed hospitality market recovering quickly with sales volume up 267.1% yoy to 5,933 units, driven by ample new launches of 7,921 units (143.4% yoy). The new supply was mostly from Phu Quoc, Binh Thuan, Ba Ria–Vung Tau, Quang Ninh. The take-up rate sharply expanded by 25.2% pts yoy to 74.9% in 1H22.

For a few reasons, experts agreed that Vietnam's hospitality property sector had a great deal of potential for growth. In the top 3 fastest expanding tourism markets, the number of visitors increases by 10–15% annually in areas with adequate tourism infrastructure. Over 300,000 hospitality property goods, including condotels, shophouses, resort villas, etc., are currently being run by numerous investors throughout Vietnam. Real estate developers are investing over 600,000 billion VND (equivalent to 30 billion USD) in this industry.

However, the shortage of investment money is another significant issue the Vietnam hospitality property sector is dealing with. Additionally, the fact that foreign tourism has not yet fully recovered is a significant impediment.

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"There are numerous new impulses for the real estate sector in general and the hospitality property market in particular to rebound and maintain the current pace. That is, a stable budget management system and a progressively improving economy have created a solid basis and turned into a bright spot. The COVID-19 outbreak is under control, and the resumption of international travel has had a beneficial impact on the real estate market in general and the hospitality property market in particular", said Dr. Dinh The Hien.

Dr. Dinh The Hien claims that due to regulatory issues and a lack of investment capital, Vietnam's hotel property business still confronts numerous challenges. However, due to investments in transportation infrastructure such as the Dau Giay Expressway-Phan Thiet, Ben Luc-Long Thanh Expressway, and Ring Road 3-Ho Chi Minh City, the southern area will "take the wave" in the years 2022 to 2023, especially in 2023.

Mr. Vo Hong Thang, Deputy Director of Industry Research and Development at DKRA Vietnam, stated that the hotel property market in Vietnam experienced a positive recovery in the last half of 2022. Almost 60 recently licensed hospitality property projects were up for business. Prices for hospitality property nonetheless rose in comparison to the same period the previous year, despite the epidemic's effects.

In Mr. Chu Duc Toan's view, the presence of COVID-19 vaccinations and a recovery in Vietnam's tourism will enable the hotel sector to recover fast starting in 2022. "We anticipate that landed hospitality property will be the first industry to reap the rewards of the recovery as consumers seek out areas with privacy and a natural setting. We observe that coastal cities like BR-VT and Binh Thuan are benefiting from the construction of infrastructure like the Dau Giay-Phan Thiet road and the Long Thanh international airport, offering strong growth potential for investors", said Mr. Chu Duc Toan.