Last update 5/23/2012 2:03:00 PM (GMT+7)

Investors fleeing from resort real estate projects

VietNamNet Bridge – The investors, who believed that resort real estate, unlike other property market segments, would never fall into decay, have changed their thoughts and tried to run away from the market.

By the end of December 2011, the Binh Thuan provincial authorities had revoked the licenses of 165 real estate projects due to the investors’ delay in implementing the projects, including some huge ones.

Truong Quang Tuan, an investor from Hanoi, registered to buy a villa at Ocean Villas Da Nang project. It was estimated that the total sum of money he had to pay to the project developer reached 11.5 billion dong.

However, Tuan has decided to sell the villa at a loss, because he needs money right now for other investment deals. The ad piece posted by Tuan on Internet says the sale price is 10.2 billion dong, but Tuan has revealed that the final price would be “negotiable.”

Another reason behind Tuan’s decision is that he fears he would not make profits from leasing the villa to other people.

“It’s still unclear about the possibility of leasing the villa. Meanwhile, in the immediate time, I would have to spend 600 million dong on interior decoration and pay annual management fees,” Tuan said. “Therefore, I’d rather sell the villa and seek other investment opportunities.”

Not only Tuan, other resort real estate developers have admitted that they were too optimistic about the resort real estate market. The investors believed that the resort real estate market segment would not bear the same fate like other market segments, because this market segment targets rich people, who stay safe from the economic crisis.

In 2010, the developer of a resort real estate project in Vung Tau City, when answering the interview to Nhip cau Dau tu newspaper, affirmed that in the economic downturn, resort real estate projects would still “live well”, because the investors expect to make profits from re-leasing villas to tourists and other clients.

However, the same developer has revealed that he has just sold 50 percent of the project’s products, even though he spent a lot of money on marketing campaigns.

In 2008-2009, a lot of resort real estate projects were “drawn up” by investors. At that time, some real estate consultancy firms predicted a new wave of the investment in the resort real estate sector.

However, the forecast has not come true, and the economic crisis has made a lot of the projects remain on paper forever.

In the last two years, a lot of resort real estate project developers have “fled for their life”. A lot of big projects, registered by both foreign and domestic investors, have been taken back by the local authorities.

Bai Bien Rong project by Dragon Beach Group in Quang Nam province once caught the special attention when it was introduced with the huge investment capital of 4.15 billion dollars. However, the project never comes true because the Quang Nam provincial people’s committee revoked the investment license in late 2010 after the investor refused to make a deposit and did not take any move to implement the project.

The 1.3 billion dollar Vungtau Wonderful World Theme Park project developed by Good Choice USA-Vietnam may follow Bai Bien Rong’s footsteps and see the license revoked in the near future.

According to the Ba Ria - Vung Tau provincial planning and investment department, the department has sent a document to the investor’s registered address in the US to inform about the decision to withdraw the license of the project because the investor did not implement the project.

It is estimated that only 15 percent of the products at resort real estate projects have been sold to foreigners, while the other 85 percent are Vietnamese people, who have realized that it’s not easy to earn money from resort real estate investment as previously thought.

Nhip Cau Dau Tu