Whether you are investing or not, you should read the article about the disadvantages of investing in resort villas to have a more objective view of this form of investment.
Risks when investing in resort villas
Besides the attractive figures and great incentives from resort villas, this type also has the risk of arising from both objective and subjective factors.
Risks from external factors
Regional economy: the level of economic development will affect the quality of service, infrastructure of the resort and surrounding area, impacting the target audience and customer range.
Politics: When politics is unstable, it will affect the safety of domestic and international tourists, and is also an important factor in whether they decide to stay there or not.
Natural conditions: Location, climate, natural disasters are unavoidable factors that humans can hardly influence. With resort real estate, these factors have a significant impact on the uniqueness of the product as well as the safety of operation.
Customer needs: Products that want to gain a foothold need to hit the psychology and tastes of customers. “Hitting wrong” will certainly not bring high profits.
Competition in supply: experts are warning about the risk of saturation in the resort real estate market.
Fluctuation of bank interest rates: no one can predict the fluctuation of bank interest rates. If the bank interest rate fluctuates more than the committed profit, the risk will belong to the investor.
Risks in choosing an investor
Among the matrix of large investors, you should carefully consider choosing investors with prestige and big brands. Because if you choose the wrong investor, it can lead to bad situations such as: slow progress, late handover, broken committed profits, unstable operation and exploitation capacity causing many problems.
Ability to operate resort villas
The ability to exploit the villa business after handover determines the room capacity, room rate/night and annual profit of the investor.
How transparent is the annual business results audit report of the villa operator? Is the room occupancy rate as expected, is the room price stable at a high level or does it fluctuate from time to time? Who will be the auditor?
Risks from supply and demand imbalance
As analyzed above, the value of a resort property is built from the value of the land and the value of the villa. If the resort villa you buy is located in a tourist center, it will certainly have to face no small competitive pressure from other similar resorts.
The number of equivalent or higher-end real estate areas is increasing, which means that investment risks are also increasing, because resort tourists are extremely demanding and have high tastes, always wanting to use the highest quality and most advanced services. Vietnam is one of the few tourist countries that has taken the action of giving full planning authority to a single investor for a tourist area. And in Vietnam, only Tan A Dai Thanh has such great incentives.
Profits are not as expected due to oversupply
According to HoREA, in the coming years, the supply of resort real estate shows signs of continuing to develop rapidly and increase dramatically, leading to a situation where supply exceeds demand and therefore business and exploitation efficiency may not meet expectations, leading to a situation where some investors may not be able to fulfill their profit commitments to customers.
This article is based on many objective factors, so you also need to consider and review more subjective factors to make the best choice when choosing this form of investment. Hopefully you will find something useful in the above article.
