For years, developers have pitched Da Nang, a city in Vietnam with a 19-mile stretch of beach on the South China Sea, as Asia’s next luxury hot spot to rival sumptuous resorts in Thailand and Indonesia. Now, after a difficult period, there are signs the market is picking up.
Five out of eight oceanfront villas in the latest phase of the Danang Beach Resort have sold in the past three months for $1.6 million to $2.8 million, says Matthew Koziora, director of sales and marketing at Vietnam-based developer VinaCapital Real Estate. The most luxurious homes in the 642-acre resort have five to seven bedrooms, large terraces for indoor/outdoor living and multiple private swimming pools.
About a third of the homes also have sold at the Estates at Montgomerie Links, south of Da Nang with 66 contemporary homes along an 18-hole golf course designed by European golf pro Colin Montgomerie. The development, which opened in 2009, sells homes that range from $500,000 to $850,000.
Jai Mehta, a banking executive in Hong Kong, was looking for a vacation home with access to golfing. He considered popular destinations such as Phuket, Thailand, and the Maldives, but instead was lured to Vietnam’s investment potential and proximity to Hong Kong. In November, he closed on a two-bedroom, two-bathroom, 1,463-square-foot condo at the Hyatt Regency Residences in Da Nang. The unit has floor-to-ceiling windows, teak veneer closets, terrazzo floors and limestone bathroom countertops. Listed for $473,825, the condo was about 20% to 30% less than it would have cost in other luxury Southeast Asia resort destinations, real-estate agents say.
The semi-developed beachfront with fine sand and clear water is somewhat of a newcomer to the Southeast Asia resort scene, and it is attracting local and international buyers with its celebrity-designed golf courses, a new airport terminal and a location about 60 miles from three Unesco World Heritage sites, including Hoi An, an old port town. “The opportunities here are what people had in Phuket 15 or 20 years ago,” says Christopher Piro, a real-estate agent with Vietnam Sotheby’s International Realty.
Many condos in Da Nang are priced from $200,000 for a one bedroom to $1 million for a three- or four-bedroom penthouse. Oceanfront villas with private infinity pools, living- room pavilions and marble countertops represent particularly good deals, real-estate agents say, with asking prices between $700,000 and $2 million. At the end of 2013, one of the largest waterfront villas with more than 30,000 square feet sold to a Chinese buyer for about $3.1 million—a relative bargain for Southeast Asia.
“Right now we’re at an inflection point with supply and demand,” says Peter Ryder, CEO of Indochina Land, the developer of the Estates at Montgomerie Links, Hyatt Regency Residences and the Nam Hai, which includes 40 private luxury villas in Hoi An, with soaking tubs and terra-cotta tile roofs. “But I see demand outstripping supply within the next 12 months.”
There are risks to investing in this frontier market. The last real-estate boom in Vietnam’s property market sparked rising inflation, which prompted banks to tighten lending a few years ago. The move brought the real-estate market to a near standstill. Some sectors suffered more than others, with prices in the mid- to high-end of the market falling more than 50% from the 2008 price peak, according to real-estate services company Jones Lang LaSalle Vietnam.
It wasn’t until two-thirds of the way through 2013 that activity started to pick up again, as lending rates improved and many analysts believed the market had bottomed out, says VinaCapital’s Mr. Koziora.
Furthermore, it is still complicated for foreigners to buy property unless they are a chief executive of a local company or married to a Vietnamese resident, says Stephen Wyatt, country head of Jones Lang LaSalle Vietnam. Foreigners can only purchase property with a maximum lease of 50 years and can’t buy land, which is state-regulated.
The government is considering changing some of these laws to make it easier for foreigners to buy property, particularly in the country’s coastal and resort regions, according to real-estate firms. The changes, which would take effect in July 2014, would allow foreigners to sign a 50-year lease with the option to extend it another 50 years, or a 70-year lease with no extension.
The recent renovation of Da Nang’s airport has helped create momentum. Before the renovation, only a handful of international flights came each week to Da Nang. Today, there are 50 international flights a week, with that number expected to double over the next two years.
Home Vietnam: Is Danang’s resort villa and condominium market improving?