It is no coincidence that resort real estate has received great attention from real estate investors. According to analysts, resort real estate is actually on the rise, so in this article AHS will help you understand what investing in resort real estate actually means.
What is resort real estate investment really?
Buying a resort real estate product is completely different from buying a normal apartment to live in, because they are an investment product. Invest in the opportunity to make a profit from buying land in developed tourist areas, and also invest in the opportunity to make a profit from business activities on these tourist lands.
It doesn’t matter how far away the villa is from you, it doesn’t matter that you won’t be able to use it freely, but from the “tourism potential of heaven, the profit potential of the land” for you to judge and make investment decisions. Of course, you also need to consider very carefully the investors – those who will take the money and invest for you, building attractive resorts that bring benefits to all villa buyers.
And so, when buying a resort real estate product from an investor, you naturally become a small shareholder contributing to the construction of that Villa area and sharing the profits earned. It can be said that when buying a resort real estate, we are buying a profitable investment opportunity.
Risks from investing in resort real estate
Risks from choosing investment areas
A resort real estate product usually has a payback period of at least 10 years. 10 years is not a very long period of time but it is enough to completely change the relationship between two neighboring countries, completely change the economic and tourism development position of any territory; turn a country or an administrative region from having great tourism potential to a place with high investment risk.
Therefore, if you do not carefully consider: economic and tourism development policies, foreign policies, and even thoroughly understand the leaders of the country or administrative region in which you intend to invest, you may still be at risk of not being able to recover your capital or losing everything. Vietnam must be assessed as a very potential market for resort tourism activities.
Maintaining a single-party rule has helped Vietnam maintain long-term internal peace and stability for nearly 50 years (since the country was completely liberated). Moreover, after the “East Sea Oil Rig” incident two years ago, we have seen the ingenuity of the government, which can help Vietnam avoid long-term conflicts.
Risks from choosing investors
The investor is the one who is primarily responsible for using the capital of investors to build resorts and do business to earn profits. Therefore, if you do not choose carefully, you will definitely "throw money out the window", at risk of losing everything. When choosing an investor, it is necessary to pay attention to the following 3 things:
Visionary investors: The vision and business development orientation of the investor is extremely important. If you choose investors with a long-term strategic vision, a large-scale development orientation, the ability to create real estate products with outstanding and unique values, and most importantly, suitable for customer tastes, then your ability to recover capital is certainly guaranteed up to 30%.
Investors have a stable source of income: The ability to pay profits of an investor needs to be built on solid evidence. And the annual income of the investor is the most reliable evidence to help investors feel secure in investing. Ensuring this factor means you have gained 30% more ability to recover capital.
Dedicated investors: Customers using resort service packages are mostly middle and upper class people. The demand is extremely strict, always requiring the most perfect products. Only truly dedicated investors, always caring about customers, and at the same time caring about investors can have outstanding products, bringing long-term investment efficiency. Finding a dedicated investor can determine the ability to recover capital for 30%.
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. It is necessary to consider the transparency of the annual business results audit report of the villa operation unit. Is the room capacity as expected, is the room rate stable at a high level or just fluctuates from time to time. Who will be the auditor?
Liquidity risk
In fact, the investment in resort villas has lower liquidity than other investment types such as townhouses, apartments, and land. It is more suitable for long-term investment, "the goose that lays the golden eggs", rather than for short-term investment. Therefore, investors need to clearly define their investment goals from the beginning.
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.
Fluctuation of bank interest rates
Fluctuations in bank interest rates are unpredictable. If the bank interest rate fluctuates more than the profit commitment, the risk will belong to the investor. The profit commitment, whether high or low, is only shown on paper when signing the contract. What is important is the actual profit received in the future.
The above risks can change depending on the situation at each time, so it means that what you think is a risk can at some point turn into an opportunity for you. Be calm and choose the right path for yourself to succeed.
