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Lift The Veil Behind Which Is Hidden The Future Of Vietnam’s Economy

Posted by Khoi Pham on April 19, 2020

Next to the previous content about the huge benefits of the two key infrastructure projects, the North-South Expressway Project CT.01 and Vietnam Coastal Road, can bring, somehow, people still do not really gather the their urgency and need.

What is the key trigger to build North-South Expressway Project CT.01 and Vietnam Coastal Road?

In the world, large real estate corporations often search coastal provinces to survey and build hi-tech industrial parks. Industrial real estate (industrial parks, processing export zones, open economic zones, software parks, hi-tech parks, manufacturing warehouses, import and export container ports…) is highly recommended industry to develop and prepare for the economic boom.

INDUSTRIAL REAL ESTATE creates much more value than residential real estate which does not contribute much to the country’s economy, since it is only redistributing domestic income, as a type of gambling with less foreign currency attraction, not a form of true prosperity.

When the epidemic occurs, the countries, which can manufacture industrial and agricultural production by themselves, are stable. Both industry and agriculture will help a nation prosper quickly. Out of the 34 OECD countries (the most developed countries in the world), also called industrialized countries, Asia currently only has three dominant ones: Japan (joined in 1964), South Korea (joined in 1996) and Israel (joined 2010). Which next Asian country can join is still a mystery.

The characteristics of these three OECD Asian countries are they all have seaports and developed coastal industrial zones for production and export. However, their agricultural production are also strong. Japan, South Korea and Israel remain excellent food self-control (wheat, barley, rice, vegetables, fruits, meat and fish) for both social stability and export.

Their corporations are multi-sectoral investing heavily in industrial production and controlling everything. Almost all coastal land, except for the beautiful sandy beaches are reserved for tourism, is invested in seaports to export goods. Around 200 km radius from those seaports, there are many industrial parks and processing zones exporting to gain foreign currencies.

Young start-ups in production fields in these countries are strongly supported by investment funds (from large entrepreneurs). Those have good production models can attract investment capital or capital lend without interest. With real estate corporations, their strongest product is industrial real estate, mainly industrial parks and factories for rent.

Vietnam is way behind, if the country wants to prosper in the next 50-100 years, this and the next generations need to invest in technology and production to be self-sustainable and backed-up from the up and down of commerce or service fields sometimes got hit by the epidemic.

Without agriculture, unstable.

Without industry, inadequate.

Without education, retrogressing.

Without commerce, unsocial.

Saying that, if a country wants to thrive, coastal industrial real estate must be developed. In order for them to kick-off, besides the convenient transportation connection, abundant human resources, mild weather all year round, stable ground and land conditions, close to residential areas, is Deep Seaport the most crucial to have (accommodating large ships of 250,000 DWT or more)?

Thus, the North – South Expressway Project CT.01 and Vietnam coastal road are quite large, but actually just a preparation step to connect the regions for the Industrial Parks and Deep Seaports blooms.

In addition, ​​commercial office complexes, houses, hotels and retails areas built with international standards will be required to meet the needs of employees and professionals working in these zones. Road transport system connecting the ports with the international airports and railway stations will create opportunities to develop tourism services in coastal areas with beautiful beaches, creating two parallel key economic developments at the same time: Coastal Industrial Zones / International Seaports and Tourism.

Phu Yen Tourism

With the current rapid growth of tourism in most coastal areas, the demand for resorts and retails is huge. Recently, upheavals in the Condotel segment have created opportunities for the long-term ownership coastal real estate with clear legal and has potential for both accommodation and retails.

Vu Cuong Quyet, General Director of Dat Xanh Mien Bac, said: the resort real estate projects with clear legal status and long-term ownership still have high liquidity, even increasing price. On the contrary, the projects with unclear legal, unbusinesslike developers do not comply with commitments are not welcome and suffered decreasing price.

The taste of investors of these real estate products are usually the ones located on major coastal roads or in large complexeslocated in a prime location in emerging areas that are witnessing a boom in annual tourism growth and relatively cheap price.

As noted, in some new areas, this trend is rising. In the North, Quang Ninh is witnessing a strong development of this type. Some new resort urban areas such as Phuong Dong, Sonasea Van Don, Vuong Long, Thong Nhat are forming quickly.

In the Central of the tourism cities such as Vung Tau, Phan Thiet, Nha Trang, Binh Thuan… the number of permanently owned resort real estate projects are only a handful.

According to Nguyen Van Dinh – Vice Chairman of Vietnam Real Estate Brokers Association, the reason for the rapid growth of coastal real estate is due to the speed of migration in these cities. In addition, the increasing shopping and spending from tourists has led to a strong demand for resorts and retails in these areas.

For example, Binh Thuan, recorded a clear growth with the number of tourists per year higher than 4.7 times the population of the whole province, of which in 2018 Binh Thuan welcomed 5.8 million visitors, bringing in total revenue about 13 trillion dong. In 2019, Binh Thuan welcomed 6.4 million visitors. According to statistics, the average spending per international tourist in Vietnam reached 104 USD (nearly 2.4 million VND) and domestic tourist about 1.6 million VND a day. Accordingly, with 6.4 million visitors, it’s a fairly good treat for Binh Thuan’s tourism revenue each year.

As a consequence, the trend of searching for coastal resort real estate will increase in the next few quarters to the next few years, as Vietnam has not yet fully exploited the great potentials of this smokeless industry.

In 2018 alone, Vietnam welcomed 15.5 million international tourists and about 80 million domestic tourists, as an increase of 19.9% ​​and 6.8% over the same period last year. Along with the orientation to be the major economic sector, Vietnam’s tourism is expected to witness even more impressive developments in the coming time, which will lead to the rapid growth of accommodation demand.

However, experts also emphasized although the attraction of coastal apartments and townhouses is undeniable, investors still need to consider many important aspects before deciding to purchase, one of which is limits of exploit-ability. Commercial townhouses located in Integrated Resort (IR) tourist complexes with diverse utilities and services will have the advantage of approaching abundant tourists.

Phu Yen tourism can easily reach the goals

So, for individual real estate investors, there is no need to exert too much effort with Industrial Real Estate that usually comes in very large scale, coastal commercial real estate which is both financially suitable and profit guaranteed is a lot more attractive.

However, existing coastal permanently owned projects are only a handful. Projects that pay the land use fee for long-term ownership become “hot” products are welcomed by both real buyers and investors. Not to mention, where on 3,260 km of the Vietnam coastline to be selective with all of the following conditions in return for both high profit and safety?

  • Clear legal
  • Location in the heart of a coastal city
  • Potential of Deep Seaport development
  • Owning good regional connection with airports, coastal roads, railway stations
  • Potential of coastal industrial real estate development
  • Potential of tourism development

There is one place satisfied all of them. And when they are all aligned, the expecting profit can be double or triple within 1-2 years. Where is that place? Stay tuned for the next content:

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