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MPI official bullish on resort real estate sector
Phan Huu Thang thinks Vietnam’s tourism real estate market will see a boom in five years if investors can realize its potentials and have reasonable market development strategy. That’s why he’s setting up an industry association.
In an interview given to Thoi bao Kinh te Vietnam (VNEconomy), Phan Huu Thang, currently the head of the Ministry of Planning and Investment’s Foreign Investment Department, said that real estate developers should promote investment in resorts, because this will be a key segment of the market in the time to come.
TBKTVN: Just how interested are foreign investors in Vietnam’s tourism real estate?
Phan Huu Thang: Investment in real estate has been increasing significantly in the last two years, responding to many changes in the land laws.
Real estate is the second biggest magnet for foreign direct investment (FDI). Nearly 300 projects are licensed and total registered capital is $33.9 billion. That’s over 20 percent of the total number of projects and 16 percent of total registered capital. Foreign investors have shown special interest in real estate projects that will serve the tourism sector.
A lot of big resorts were licensed in 2008, including the $4.23 billion Ho Tram complex project by Asiana Coast Development, a Canadian investor, in Ba Ria-Vung Tau. Prior to that, the same province allowed a US investor, Good Choices, to a license to build a $1.3 billion five-star hotel, entertainment and restaurant area. Starbay Holdings was licenced to build the $1.65 billion Bai Dai tourism complex on Phu Quoc island.
TBKTVN: We haven’t yet developed resorts of international scope. . . .
Phan Huu Thang: Other countries in the world have been stressing seacoast development strategy. Our beautiful and unpolluted sea is an ideal setting for luxury resorts. Tourism always is capable of making big contribution to the national income of other countries. If we can effectively exploit our 3,260 kilometres of coast, 125 beaches, beautiful landscape and cultural heritage, we will be able to build up a tourism real estate market of international scope.
TBKTVN: But ‘tourism real estate’ doesn’t mean just seaside resorts. . . .
Phan Huu Thang: Yes, you are right. In the immediate time, however, we should concentrate on developing projects along the central coast, all our beautiful beaches from Quang Binh south to Ninh Thuan.
Looking further, we can exploit the big potential in other areas such as the Red River Delta, Mekong Delta, the mountains of northwest Vietnam and the Central Highlands area. All these places can be ideal areas for resort development.
TBKTVN: Which investment model for tourism real estate can bring the highest returns?
Phan Huu Thang: The chains of villas, resort apartments and villas associated with golf courses have become the favourite models. Villas have been designed with features that allow people to relax while staying close to nature. Hill slope, forest and mountain areas, lake or coastal areas are the top choice for resorts.
This sector includes lots of facilities that serve tourist visitors – hotels, villas, vacation apartments, recreation and sports areas, casinos, natural or artificial landscapes, restaurant zones, cultural and historical sites, and, of course, service industries and training activities.
TBKTVN: Domestic real estate developers have a big advantage in that they are able to access almost unlimited tracts. Why do they have an inferiority complex vis-à-vis foreign developers?
Phan Huu Thang: You are right that Vietnamese corporations have a big advantage that foreign investors do not have: lots of suitable land. Most of the best tracts have fallen into the hands of domestic investors. They have pushed land prices up. Meanwhile, foreign investors do not have land to carry out projects and encounter difficulties in site clearance.
The problem is that many Vietnamese investors do not follow long term investment plans. They just wait to see the land price escalating and then sell the right to develop a project to foreign investors. I think that our businesses should get together to settle the problem.
TBKTVN: Is that why you have taken the lead in organizing an industry association, the ‘Vietnam tourism real estate branch’?
Phan Huu Thang: Domestic real estate corporations are still weak in financial capability and management technology. We still do not have an overall plan to develop the market.
Therefore, domestic developers need to work together to make suggestions to the State about reasonable policies which can help develop the market. It is necessary to settle the existing problems, including high land prices, complicated procedures and poor infrastructure.
On August 29, we will establish an executive board, and in October, we will organize a conference on tourism real estate. We hope that we will have 300 members by the next year.
We are also seeking foreign partners, especially from US, Japan or Asia.
vietnamnet, vneconomy
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