Week 26/2020 – Central Vietnam Real Estate News Summary
In this weekly and 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.
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1. In an article titled “Industrial welcome the new-comers”, the author informs us that in the current market, industrial real estate has emerged as the most attractive segment today. However, in order to be able to sustainably develop and attract quality FDI inflows in the new climate, it is necessary to promote the restructuring of existing industrial parks and the development of new industrial parks in association with housing and public infrastructure; reviewing the plans and giving priority to the development of industrial real estate in key economic areas where conditions permit.
CVR believes the new wave of relocation after the pandemic is huge, and Da Nang is considered a potential destination for investors. Appropriate properties are in demand for industrial zones all around the country and Da Nang in particular.
2. The title of the next article is quite self-explanatory: “Accelerating the project of Ancillary Industrial Area in service of Da Nang’s high-tech park”.
The Ancillary Industrial project covers an area of over 102ha, with a total investment of 235 billion VND, contributing to providing ancillary services, forming links between businesses, and promoting the development of industry in Da Nang. This will give immense support to investors, not only in production and business activities but in building a community ecosystem for the whole park, which can lead to other joint developments.
At CVR, we believe these actions suggest that the Da Nang Government has serious intentions to build the High-tech Park, a good sign for investors who want to invest in Da Nang.
3. The next article we find attention worthy suggests “Tourism is thriving after Covid-19, chances for vacation real-estate industry”
In this article the author points out that the internal tourism boosting project has made a positive impact on travel real estate. Thanks to the government’s effective response to the pandemic, Vietnam has a high score in the eyes of the world, not only because of its beautiful nature but because it is a safe place to live. Vietnam is expected to be the top destination after Covide-19, for both domestic and international travelers.
Additionally, there are more and more manufacturers relocating from China to Vietnam, which will also increase the number of tourists coming to Vietnam.
By 2030, Vietnam anticipates 50 million international travelers and 160 million domestic travelers. An estimated 300,000 rooms will be needed to accommodate the targeted number of travelers.
Tourism real estate in Vietnam is good quality and very reasonable priced – much lower than other places in Asia such as Phuket or Bali. That said, it’s very important to have the right strategy for this real estate segment. There is a need for a wider variety of products and services, creating new models of business and increasing customer satisfaction.
CVR experts agree that this is a positive prediction for the tourism real estate industry. For investors, this news suggests that buying properties in this segment will result in good profits in the future.
4. Mai Que of baodanang.vn writes: “Luxury tourist yachts launched in the city”
On June 24, Song Thu Corporation completed construction and launched two high-quality luxury tourist yachts. It is expected that in early August 2020, they will start operating to serve customers on the Han River.
CVR believes this will be an attractive destination for tourists and will promote overall tourism in Da Nang.
5. An interesting article by An An, titled: “Covid-19 is changing the contract between the owner and the tenant”
As the author points out, a pandemic is not a binding term in most types of commercial contracts. Unless the contract clearly describes the term ‘plague’ or ‘pandemic’ as a force majeure event, the landlord is not obligated to make any concessions on rent. With the lack of precedent, landlords and tenants must negotiate rent reductions or deferred payments.
The relationship between landlord and tenant is typically built on a long-term basis. Although neither side is at fault in an unpredictable situation, the drafter of the contract is undoubtedly scrutinizing the binding terms for similar situations that may occur in the future. The lessons learned from the pandemic will change the terms of future leases and reshape the dynamics of real estate.
The terms will vary in regard to the rent, the length of the lease, and requirements for protecting the health of guests. Moving forward, both parties will consider more carefully the drafting of legal documents, specifically addressing rent reduction or deferred payment in cases of similar crises.
Some landlords reduced their rents in February and March, from 10-30%, with top priority given to food, beverage and entertainment groups. Other landlords have considered a 10-50% rent reduction, depending on the tenant’s performance. Some landlords also considered moving from the traditional fixed-rent model to revenue and rent sharing (as applied by most international landlords), to help share the risks and strengthen the relationship between the landlord and tenant.
CVR believes the challenge will come when tenants want to renegotiate rental benefits beyond the limits of what both sides are willing to accept during this time. Long-term relationships will depend heavily on negotiations. Instead of keeping an outdated rental model, landlords and tenants need to be flexible and creative in dealing with challenges.
6. The last piece of news worth mentioning for the week: “Wyndham Soleil Danang opened the sale of Ethereal building with the most beautiful sea view of the project”
After selling out the first phase of units offered in the 57-storey “Nimbus” tower, the tallest building in the Central region, Wyndham Soleil Danang opened sales in the 50-storey “Ethereal” tower, offering the most beautiful sea views of the project.
More than 30 domestic and international travel agencies, and 8 distribution agents have signed cooperation agreements, and more than 1,000 investors are seeking information about this project.
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CVR agrees that this is a good project for investment in Da Nang at the moment.
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