Pain set to continue for resort real estate in 2022

The liquidity in the condotels, beach villa and beach shophouse segments has dried up in the last 12 months, with no transactions in condotels for months, according to DKRA Vietnam.

In the first quarter of 2021 the HCMC hotel market was gloomy as the third wave began in late January. The average room rate fell by 20 percent year-on-year and occupancy rate was only 17 percent, down 31 percentage points.

The five-star hotel segment was affected the most, with room rates down 30 percent and occupancy down 35 percentage points year-on-year, due to its heavy reliance on corporate and foreign guests.

The resort real estate market did not even start to recover before the fourth wave began in late April. The number of tourists fell by 40 percent during this period and room cancellations were rampant as the first Covid infections were announced in late April and early May.

Major tourist destinations like the central cities of Da Nang and Nha Trang had a slew of cancelations just before the April 30-May 1 public holidays.

MICE tourism (meetings, incentives, conferencing and exhibitions) in HCMC and Hanoi were also affected as conferences were postponed or canceled due to the pandemic.

In the third quarter, the most stressful period in the fourth wave, the resort real estate market came to a standstill as strict social distancing was in force.

In the fourth quarter things were expected to improve as many southern provinces and cities lifted restrictions, and travel resumed all over the country, but Covid testing requirements continued to stymie the market’s recovery.

The resumption of international flights in January to several Asian countries and the U.S. and recognition of vaccine passports are now expected to revive it.

Some tourist destinations have begun to welcome foreign visitors again, but safety rules remain a dampener.

In the final months of 2021 condotels were still not bought while townhouses, beach villas and beach shophouses saw modest number of transactions.

Su Ngoc Khuong, senior director of Savills Vietnam, expects the government’s plan to resume international flights to stimulate international tourism and make things a bit brighter for the resort real estate market, but does not think recovery will be quick.