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|Hyatt Regency Danang Resort & Spa will complete construction this summer|
Since its launch two years ago, Hyatt Regency Danang has sold out 140 of 155 condominiums and 22 of 27 villas at staggering prices starting at $180,000 and $1.2 million respectively.
However, the successful sales did not push Indochina Land to immediately continue with the development of three other beachfront sites along the coastal stretch from Danang to Quang Nam province. Chief executive officer Peter Ryder said the company was still working with local authorities to clear the sites covering 60 hectares, but said “on the near term basis, we do not have immediate plans to begin construction of these sites.” He added that “we will definitely develop the sites in the future but are today proceeding cautiously.”
Indochina Land’s caution over developing and selling new second-home projects in Central Vietnam is attributed to a glut of similar projects that have mushroomed along this coast following the successful launch of Hyatt Regency Danang and the Ocean Villas, a gated villa community developed by Vina Capital within Danang Beach Resort.
In addition to 131 units at the Furama Villas and 39 villas at the Vinpearl Luxury Danang, the market recently saw the launched of 114 villas at the Sun Villas project and 15 new units from the Dunes Residences, bringing the total supply of villas in the Danang market to 471 units in eight projects.
Property consulting company CBRE estimates that new launches this year include the Norman Estates, the fifth phase of the Ocean Villas, Mecure Son Tra, InterContinental Bai Bac and Montgomerie Links, with total 110 new villas coming online.
The new supply has led to Indochina Land’s concern about the overbuilding in the resort market in the Danang-Quang Nam area, discouraging it from developing new sites.
“General speaking I am concerned about the amount of resorts under construction and to be opened in the next three to four years in Danang and Quang Nam area,” said Ryder.
Although vacation homes along this coast have attracted a considerable number of buyers with a majority of them coming from Hanoi, CBRE claims that nearly half of the stock is unsold. Most of the villas in the area have been sold at the range of $500,000-$900,000 per unit.
Despite its concern over an oversupply and hesitance to develop new sites, Indochina Land continues to make the most of its success at the sales of the Nam Hai and Hyatt Regency Danang to launch new products.
The company is selling 28 condominiums of the last block within Hyatt Regency Danang at prices even doubling the level of two years ago, now starting at $370,000 a unit. It has also put on sales of 66 villas at the nearby Montgomerie Links golf course at starting prices of $500,000.
“We remain very confident in the Nam Hai, Montgomerie Link and Hyatt, because their quality, positioning and design and their operation will continue to do extraordinary well despite the overbuilding of resorts in the area,” said Ryder.
He added that it would be hard for other developers in the area to replicate Indochina Land’s success. “We had been able to secure land at very low rates, we built at the time construction costs were much lower than today. We believe to build something similar to Nam Hai in Danang and Quang Nam area these days will cost at least two and a half times the money we spent building the Nam Hai,” he said.
Despite staggering prices of the new condominiums, buyers are still chipping in. Hyatt Regency Danang sales director Michael Piro said he recently sold a penthouse for $720,000.
“With this amount of money, we can buy a villa in other resorts, but this buyer still want a penthouse at Hyatt because of its quality and brand name,” said Piro. “So we are not worried about the sales of new condominiums despite the critical mass of products going online in Danang and Quang Nam.”