Savills : Vietnam report on Da Nang real estate market H22017

SAVILLS REPORT ON DANANG REAL ESTATE MARKET 2H/2017

1. RETAIL: Rent at a three-year high

Total stock remained stable compared to 1H/2017 at 186,000 m². Hai Chau district retained the largest market share and highest retail density, followed by Thanh Khe district.

Average ground floor gross rent reached a three-year high after a 1% increase compared to 1H/2017 whilst occupancy grew 2 ppts. The retail podium segment had the most improved performance.

Approximately 22,300 m² will come online 2018 and 8,200 m² is scheduled to launch in 2019. Hai Chau district is expected to remain the most favored area by developers.

2. OFFICE: Improved Performance

Total stock was approximately 92,000 m², stable compared to 1H/2017. Hai Chau district continued to dominate with 74% of stock. Over the past four years, stock has grown at an average 6% pa.

Average gross rent increased 4% and occupancy increased 4 ppts compared to 1H/2017. Hai Chau district had the most improved performance.

One new project providing 3,000 m² will come online in 2018. From 2019 onwards, nearly 54,000 m² will enter the market, mostly in Hai Chau district.

3. HOTEL: Record 5-Star performance

Total stock from the 101 three- to five-star hotels was approximately 11,800 rooms.

Average occupancy was 73%, increasing 8 ppts year-on-year (YoY) with five-star the highest performer overall. ARR decreased -2% YoY whilst RevPAR was up 11% YoY.

Da Nang continues to establish itself as a leading destination for domestic and international tourists. In 2017, Da Nang welcomed 6.6 million visitors, up 19% YoY. International visitors were up 37% YoY to 2.3 million.

In 2018, over 2,300 four- to five-star rooms will come online.

4. CONDOTEL: Good Performance

Total stock was approximately 5,210 units from 14 projects. Ngu Hanh Son and Son Tra districts led with an 85% share from 12 projects.

Three new projects and one next phase provided 830 units to the market, most from a project by The Empire Group.

Absorption was 73% in 2H/2017. The average primary price was US$1,890/m², relatively stable compared to 1H/2017.

In 2018, eleven new projects will supply 8,320 units.

5. APARTMENT: Recovered Performance

Total apartment stock was 4,340 units from 18 projects. New projects provided 770 units to the market. Son Tra led the primary market with a 60% share.

The average absorption rate was 97% with sales in 2H/2017 eleven times higher YoY. The average asking price was US$1,410/m², down -12% YoY.

Attractive projects with rental potential are located along the coastline.

In 2018, more than 610 units will enter the market.

6. SECONE-HOME VILLA: Limited Primary Stock

Total villa stock was approximately 800 dwellings from 15 projects. Ngu Hanh Son district was the largest supplier, representing a 91% share from 12 projects.

No new supply and stable demand resulted in market-wide absorption of 86 percent. Developer reputation, guaranteed returns and beach proximity were key success drivers.

Fully finished villa land prices ranged from US$1,000/m² to approximately US$1,700/m².

In 2018, 45 dwellings will come online.