Savills Vietnam report on Da Nang real estate market H12017

08 September 2017

H1 2017

First half GDP up 8.1% over 1H/2016. Registered FDI surged 269.5% year on year (YoY) with US$14.3 million disbursed. Nearly 2,400 new businesses were established. Retail sales up 17.1% YoY to US$ 2.1 billion. International visitors up 72.2% YoY to 1.2 million. Total inbounds up 33.2% YoY. 1H/2017 credit growth of 7.5% a 6-year high.

1. RETAIL: Softer Performance

Total retail stock increased 17.3% YoY with the new F Home shopping centre entry in Q3/2016 and Nguyen Kim supermarket reopening in Q4/2016. Hai Chau district remained the largest supplier with a 35% market share, followed by Thanh Khe district with 30 percent.

First half average ground floor rent eased -0.2% YoY and occupancy decreased -1.7 ppts YoY, mainly due to slightly weaker performance in the retail podium segment.

No supply is expected to the end of the year. Three projects with 22,000 m² are scheduled for 2018. Future supply will be mainly concentrated in Hai Chau district.

2. OFFICE: Increased Rent But Decreased Occupancy

Total office stock increased 6% YoY with one project closure and another opening. Hai Chau district has 74% of stock.

Average rent gained 11% and occupancy decreased -4 ppts YoY to 87%. Grade C had improved performance but Grade A softened a little.

In the second half, no new project is expected. Next year, one project with more than 3,000 m² is scheduled to launch in Hai Chau district.

3. HOTEL: Five-Star Performs Best

Total stock from the 86 three- to five-star hotels was approximately 9,400 rooms. ARR increased 11% YoY. RevPAR was up 22% YoY.
Average occupancy was 72%, up 7 ppts YoY with five-star the highest performer, and best performance to date.

Da Nang continues its establishment as one of the leading local destinations for domestic and international tourists. In 1H/2017, there were 3.2 million visitors, up 33% YoY. International visitors were up 72% YoY to 1.2 million. In 2H/2017, over 1,300 four- to five-star rooms will come online.

4. APARTMENT | CONDOTEL: Stable Performance

There was one newly launched condotel project in the first half.
Total apartment stock increased 3% YoY with one newly launched project.

Apartment average absorption rate was approximately 33 percent. Average apartment primary price was US$1,690/m², down YoY. By year end, two projects will launch 1,200 apartments.

Condotel absorption was relatively high at around 70 percent. High and committed yields up to 12% pa and the more recent developer buy-back commitment is increasingly resonating with buyers.

Large condotel supply mainly from domestic developers is expected to year end and into 2018.

5. SECOND-HOME VILLA: High Absorption

Total villa stock was 801 dwellings, of which 169 were from the primary market. Ngu Hanh Son district was the largest supplier with 728 dwellings, representing a 91% share, followed by Son Tra district with 73 dwellings and a 9% share.

Market-wide absorption was 81% to mid year. Seven projects were fully sold. Developer reputation, guaranteed returns and beach proximity were key success drivers.

Fully finished villa land prices were from US$650/m² to approximately US$3,000/m².

In the second half 45 dwellings will enter the market. As of Q4/2016, the market-wide absorption was 80 percent. Among the 14 projects, 6 were fully sold. Developer reputation, guaranteed returns and proximity to the beach were the key success factors of all projects.


Key Contacts

Dinh Huong Linh

Dinh Huong Linh

National Head of MarCom, Savills Vietnam

Savills Hanoi

+84 24 3946 1300 Ext 112