What is resort real estate and what potential and risks does resort real estate bring is probably the question that many people want to know the answer to the most. Follow AHS in the article below because we will answer these questions for you.
Resort real estate concept
Resort real estate is a type of real estate investment based on the timeshare model (sharing fractional ownership) that started in the US in 1959, with products such as villas, hotel rooms, apartments or other forms built in tourist and resort areas.
Sold by investors to customers and coordinated with a third party to operate and exploit for rent, bringing in money for investing customers. Therefore, investing in resort real estate has 2 main functions: resort tourism and exploitation for rent.
Potential of resort real estate
High growth rate
In the context of the domestic and international economy experiencing many erratic fluctuations, investment channels such as stocks, gold, and foreign currencies also have many potential risks. Even the traditional investment channel - saving in banks - has made many customers worried due to a series of cases of "money disappearing". Meanwhile, resort real estate is being evaluated as a potential investment channel along with the development of the tourism industry - the current spearhead economic sector.
Ensure project safety
With high safety, resort real estate is always sought after by experienced investors because in this type, safety and leisurely relaxation after stressful business activities is the perfect second choice for investors.
The scarcity of beautiful locations for tourism exploitation is clearly a plus point that helps resort real estate still receive attention from investors with strong capital, because the scarcity of real estate locations is one of the key factors that help real estate value grow.
Vietnam's untapped tourism potential is the "universal lever" that helps Vietnam's resort real estate remain a fertile land for foreign investors.
Possible risks
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.
Special attention should be paid to the investor's capacity: Capital, assets, annual revenue, profit, experience in implementing similar projects. Has the reputation been confirmed by major partners and long-term customers? Some reputable major investors for your reference: Vingroup, Sun Group, Bim Group, Sovico Holding, FLC, Ceo Group, MIK Group
Risks from the product
Product quality: each product will have different locations, amenities, service quality, and designs. This creates differentiation, and is also a decisive factor in the value and long-term appeal of the product. Therefore, if a product is not developed based on market research, needs, tastes, future trends, etc., it will be very difficult to compete.
Brand: In any field, a good brand always gains trust more easily from customer care services and gains customer trust from its own reputation. In case the brand is affected, it will inevitably affect the product as well.
Project management & operation unit: Unprofessional management unit, ineffective operation causes difficulties for investors, affecting profits.
Investor capacity: may encounter problems such as poor finance, low capacity, which can easily lead to risks such as: slow progress, poor quality products, unsecured profit commitments, etc.
Risks from financial leverage: borrowing to buy/invest in real estate is not uncommon, but with resort villas, investors need strong capital. If the loan is too large, it can be a double-edged sword when investors are not sure about cash flow.
Liquidity risk: resort villas are actually less liquid than other types (land, townhouses, apartments, etc.). Therefore, it is more suitable for long-term investment than short-term trading. If not determined from the beginning, investors will easily encounter risks.
Ability to operate resort villas: the ability to operate the business after receiving the handover affects the room capacity, room rate/night and annual profit of the investor.
Risks from the regional and world economic situation
The decline in international tourist arrivals due to the Covid-19 pandemic, as well as the simultaneous decrease in remittances, has caused the Vietnamese tourism and real estate markets to stagnate and become less prosperous. Meanwhile, these are the two major markets that determine the revenue from beach villa rentals, and the value of beach villas.
According to experts, Vietnam only partially opens up to integration, while the rest is still regulated by the state, which can help Vietnam avoid major recessions. And in the next 20 years, Vietnam will not be able to fully integrate, and the economy still needs self-regulation by the state. This is a fairly safe signal for those who want to invest in the Vietnamese real estate market.
Through this article, readers will have a better understanding and grasp of the definition of resort real estate, what types of resort real estate are popular and generate profits before doing real estate business. From there, choose the appropriate investment forms. Wish you success!
