Veteran real estate firm C.B. Richard Ellis (CBRE) predicted there would be a “tsunami” of second homes on the Vietnamese market.
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| The area of Giang Dien project in Dong Nai Province. Second home projects need to be diversified and differentiated to lure more customers |
“In the near future, Vietnam’s second home market will be hit with a tsunami’s worth of additional supply. If investors are well-prepared to deal with it, it can be an opportunity, otherwise it can be a disaster,” said Marc Townsend, managing director CBRE Vietnam at a presentation held in Ho Chi Minh City.
According to research conducted by CBRE Vietnam, from early this year to the 3rd quarter of 2010, there have been about 11,000 new vacation villas and 10,000 new vacation condos built. The number of vacation villas was 5 times higher than the same period of last year and the number of vacation condos was 3 times higher.
The second home market is relatively new in Vietnam but these figures show that it was developing quickly.
Marc Townsend added, “Two years ago, we held a seminar on this market titled “Waiting for the waves.” However, at that time we did not know how these “waves” would develop. Now we can see that they have become a tsunami. With such a tremendous increase in supply, we need to wait to discover its exact impact on the market.”
Townsend also urged caution as the second home market in Vietnam has not attracted many foreign investors. Local investors of second home projects account for 85% of total investors. Among them, investors from Hanoi make up 40%, followed by those from Ho Chi Minh City who make up 30%.
Overseas Vietnamese investors account for 10% and foreign investors make up only 5%.
Meanwhile, in Thailand, local investors on the second home market account for only 18%. Investors from Europe make up 32% and those who from Asia and Middle East make up 50%.
Marc Townsend shared, “Recently, a new product has been launched on the second home market at USD80,000-200,000 per unit. This move has created an opportunity for retired people and helped expand the customer target for this market. However, foreign customers remain insignificant.”
According to Marc Townsend, European investors are very interested in the second home market in Asia Pacific countries because they have pleasant climate, green environment and beautiful landscapes. If Vietnam targets these European customers, it will have more advantages than Thailand because the price of vacation villas or condos in Vietnam is cheaper than Thailand by about 50%.
Additionally, Townsend emphasised that Vietnamese second home developers should diversify their products to differentiate in terms of locations, ownership forms and marketing methods in order to lure more customers.
He believes that locations of vacation villas or condos do not need to be strictly at coastal areas; they can be built on the sides of hills and look towards beaches or mountains. It is also necessary to pay attention to surrounding locations because second home owners do not just stay in their home but often visit neighbouring areas.
Furthermore, Marc Townsend suggested that investors could offer their customers a part-ownership or shared lease basis to use for one or two weeks in a year.
Most customers of these projects are investors and speculators so it’s necessary to pave the way for them to make profits so that they will spend money on these projects.
However, this ownership form requires reputable and professional property managers.
Marc Townsend believes that at present, Vietnamese investors still follow traditional marketing methods without applying Internet marketing which is efficient, cost-effective and broad in scope.
“Vietnamese investors should learn from investors of Thailand to be more successful. Those who can make the right decision on price and products will succeed when the tsunami hits the market,” said Townsend.
