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Week 22 Central Vietnam Real Estate News Summary

Week 20/2020 – Central Vietnam Real Estate News Summary

In this weekly or sometimes bi-weekly news flash – CVR: Central Vietnam Realty will provide a choice of articles from mainly Vietnamese media sources related to real estate market in Vietnam.
We will be focusing on issues related to Da Nang and Hoi An, while also looking at national news and their possible impact for Central Vietnam’s property market.
You will find a summary, link to the source as well as CVR’s take on the article.
We believe that local knowledge is the key to making the best possible decision and that’s what we offer to all our clients.

“CVR: Western Management – Local Knowledge”

In an article titled Da Nang city boosted demand of tourism with large scale throughout the year ”, the author introduces many programs with the most attractive products and services in a campaign named “Da Nang Thank You” lasting from May to Dec 2020.
This project is organized by Da Nang Tourism Department and many tourism/services companies in the city, focusing on domestic customers with direct flights to Da Nang, as well as looking forward to international arrivals after the success of controlling Covid-19 pandemic  and oversea flights are expected to be opened in the near future.
Some of them are: Da Nang Fantastic Beach (17/7-31/7) with big discounts for beach resort services in Da Nang; Shopping and travelling – Danang Fantastic Fortnight (23/11-6/12); Christmas and New Year events- Da Nang Fantastic Week (22/12-28/12) with many events, discounts, gifts, etc.
Many tourist destinations are free to visit like Marble Mountains, Cham Sculpture Museum, Da Nang Museum (1/6-31/8) and many others.
Outside of these initiatives, Da Nang city also created a fund for boosting tourism which plays an important role to push tourism industry further into recovery and prepare for the blossoming post-Covid-19 with more quality PR programs for Da Nang tourist destinations, nationally and worldwide. The fund has already accumulated 3.85billion VND.
CVR believes this is good happy to see the national government and local authorities push for increased domestic travel and make the necessary preparations for international arrivals.  These initiatives should attract people from all over the world to Da Nang city, stimulating growth of tourism and the city, encouraging higher demand of renting/buying/investing on residential real estate segment
Title of the next article is quite self-explanatory: The Ministry of Transport requested to reconsider a number of international routes”. 
In this article, the Ministry of Transport requests the Civil Aviation Administration of Vietnam (CAAV) to study and propose to the Ministry the resumption of some international routes before June 10th to submit to the Prime Minister for consideration and decision.
According to CAAV, the situation of the Covid-19 pandemic in Vietnam has very well controlled and socio-economic activities have already gradually returned to normal.  The number of domestic passengers in May has increased significantly due to the positive impact of the prevention and control of Covid-19
 At CVR, we see this is a great news for Vietnam likely being one of the first international travel destinations to open it’s doors to international travel. This should bolster the already recovering hospitality segment and continue to move Vietnam forward as a world-class, safe travel destination.

  1. Next article we find attention worthy, written by Trung Tin, talks about the Proposal to abolish the current apartment maintenance fee procedure”

Trung Tin highlights that the  Department of Construction proposed to stop assigning investors to collect 2% maintenance fee of in apartment projects.
To avoid wasting and disputes, Mr. Duc from the Ho Chi Minh Real Estate Association suggested that maintenance fees should not be collected before the building has shown signs of depreciation, probably from the 3rd or 5th year after handover. Besides, this payment should be divided into several installments for collection rather than a one-time payment. The maintenance fee is worth 2% of the value of each apartment, equivalent to 2% of the project value, possibly up to tens of billion, so savings can bring about a significant profit, easily causing corruption.
CVR experts appreciate the Department of Constructions notion and believe this would be a welcomed change by investors. In the new propose procedure, buyers don’t have to pay 2% of apartment price until after the operation of the building once they have a better idea how the fund and building will be managed.

  1. Trung Tin of writes in a piece titled: “High demand for industrial property investment post-Covid

Besides the hot spots to attract investment in industrial real estate such as Ho Chi Minh City, Hanoi, satellite cities such as Long An, Binh Duong, Dong Nai, Ba Ria – Vung Tau, etc. are also being examined by investors. These are all provinces with convenient locations, abundant resources and labor, synchronous infrastructure and efficient transport connections, warehousing and logistics to major cities.
The article highlights an already prominent trend of international manufacturers and logistic companies looking to diversify their supply chains after COVID-19. Da Nang, and the rest of Vietnam, stands in a great position to capture a lot of this available market in 2020 and 2021.
Interesting article by Phuong Uyen, titled: “The wave of business returns increased despite falling rental rates” has been published on a Batdongsan property portal.
As the author points out, many owners  are struggling to find tenants as difficulties in business operation caused the wave of returning houses increased sharply after the Covid-19 pandemic.
Not only large businesses, but many small-scale houses for rent are also gradually returned when tenants terminate their lease contract despite any penalties involved. Mr. Tran Thien Ai, a small wedding rental business in Binh Thanh district, said that although his rent is only 12 million / month, he had almost no customers for nearly 3-4 months now. It’s only a small household business, so a rental fee of 12 million / month is too much for him. Landlords have been willing to reduce nearly 50% of the rent in April but by this May, the maximum reduction is only 30%.
As noted by , a lot of business premises in major roads, central districts of Ho Chi Minh City as well as shophouses in apartment complexes have closed. Rental signs appearing daily. Many coffee and milk tea shops, restaurants, fashion shops, etc. returned their commercial houses after weeks of social isolation because they could not stand the financial burden. Most owners of current rental premises no longer request the price as before but actively reduce 30-40% compared to the same period last year, less binding on rental terms or payment conditions.
A recent survey of CBRE Vietnam also showed that 79% of tenants worried that their revenue in the second half of the year would be worse; 43% of tenants expect revenue to fall from 10-30% in 2020. Besides, 61% of tenants have not received assistance from landlords and 27% expect landlords to provide more support for their activities. Their business operations are severely affected. This has led to a more common return on street business, mainly from small business units, which are unable to sustain long-term.
CVR believes this is a time that both renters and landlords need to be flexible and should prioritize maintaining existing leases. For those looking for new commercial properties, now is the time to start searching and rental prices continue to decrease.
The last piece of news worth mentioning for the week: “Buyers begin to return to the Da Nang real estate market” 
After suffering difficulties such as the self-regulation of the market, the involvement of the authorities after the virtual land increases, the “Shock” from Cocobay project that developer had to stop paying profits as committed and impact of the Covid 19, from the end of April up to now, Da Nang real estate market is showing more positive signals, the confidence of buyers is gradually returning.
The survey results show that Da Nang real estate prices have increased by about 5% compared to the beginning of April.
In 2019, Da Nang surpassed both major markets Hanoi and Ho Chi Minh in apartment selling prices.
The average price of Da Nang apartment in 2019 was VND 35.6mil/m2, while in Ha Noi was VND 28.2mil/m2 and HCM was VNĐ 35mil/m2. The price of land plot projects in Da Nang in 2019 was averaged around 30mil/m2, while Ha Noi was 24mil/m2 and HCM was 50mil/m2.
CVR agrees that now is the opportunity for the market to rebound. Being a channel to keep money, the pandemic will not affect the real estate prices in the long run and the market will improve quickly.


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