1 - 10 - 2020
If it is well utilized, it will help the market develop sustainably. At the same time, this is also a channel to promote and stimulate revenue growth for Vietnam's tourism industry. That is the opinion of Mr. Mai Duc Toan, Director of CNT Group's business and investment division.
Covid-19 re-emerges, resort real estate "suffers"
Mr. Toan said that the resort real estate market was difficult after the Cocobay event, now it is even more difficult when the Covid epidemic breaks out. Customer confidence in this segment is low at the moment. Have the resort real estate unresolved shortcomings such as The legality of the project, the regulation of granting books or not? Regulations on the rights, responsibilities, and obligations of the investor and the operating unit. Therefore, resort real estate is really "suffering" double. The Covid - 19 epidemic has hurt the economy in general, the tourism industry is the hardest hit. Undeniably, the resort real estate market only develops when the tourism market recovers and develops.
However, the Covid-19 epidemic has re-emerged, and the situation of this re-emergence is quite complicated to predict. If the situation is difficult to control, there will likely be the second wave of social isolation, at this time the whole market will continue to fall into a state of pause for the second time. Which, tourism continues to be the most severely affected industry.
Mr. Mai Duc Toan, Director of CNT Group's business and investment division
"I think the market in the remaining months will still face many difficulties. The situation may be better in the second half of 2021, provided the world controls the epidemic well with the vaccines this year," Mr. Toan shared.
According to the latest market report of Savills Vietnam, the resort real estate market in the first 6 months of 2020 performed the worst ever due to the blockade policy. Room occupancy fell 36 percentage points year-on-year to 32% while room rates fell 13% year-on-year to $74/room/night. Pressure from low occupancy has led to a 21% drop in average room rates QoQ.
The 5-star segment is the hardest hit due to its reliance on international visitors. According to the Ho Chi Minh City Department of Tourism, the number of international visitors to the city in the first six months of 2020 decreased by 69% year-on-year to 1.3 million. Those numbers show that the Covid-19 epidemic has had a significant impact on the resort real estate segment in Vietnam.
In need of demand 'stimulus'
"According to my observations, from the first half of 2020, the resort real estate market has almost fallen into a state of hibernation. To remove the current market's difficulties, many synchronous solutions are needed. In addition to legal issues of the project including regulations on rights and obligations of investors, operating units, granting of sovereignty, etc., stimulating market demand is one of the effective solutions right now. Currently, tourism real estate needs a strong enough stimulus to recover and develop", Mr. Toan emphasized.
Vietnam has allowed foreigners to own real estate under Article 159 of the Law on Housing 2014. However, ownership is limited to residential real estate (apartments and individual houses in housing construction projects are not located in national security assurance areas according to the Government's regulations). For resort real estate, the law does not allow foreigners to own. Most recently, on June 18, 2020, the Ministry of Construction proposed to amend and supplement the Law on Real Estate Business in the direction of allowing foreigners to own properties.
According to Mr. Toan, letting foreigners own tourism real estate is like exporting real estate on the spot, without spending a lot of money, we can still increase capital for the industry. If exploited well, it will help the market develop sustainably. At the same time, this is also a channel to promote and stimulate revenue growth for the tourism industry in Viet Nam.
Especially, in the context that the current resort projects are facing challenges, this is a useful and practical solution to help the market demand increase significantly, further restoring the excitement of the market, and making investors feel more secure about resort real estate. Which, allowing foreigners to own resort real estate brings the following advantages: Increases the overall demand of the market; Attracts foreign currency capital; Attracting tourists to Vietnam since resort property owners in Vietnam will be able to share a 15-20 night stay at the project they buy. However, allowing foreigners to own real estate needs to ensure security and defense factors. For resort real estate, if permitted by law, it is necessary to clearly define the locations and areas that foreigners are allowed to buy.
Sharing about the rate of buying a tourist real estate project, Mr. Toan said that it is difficult to say a specific number, but now the law has regulated the ownership of a real estate by foreigners in Vietnam must not exceed 30% of the project's product volume. For tourism real estate, we need to have specific regulations on how much each area will get? How long is the ownership period? Rights and obligations of customers who are foreigners? Transfer conditions? Renewal problem when ownership expires? All on the principle of ensuring national security and defense.