Press Release

CBRE Releases Real Estate Market Update Highlighting Key Trends in Da Nang - H1 2022

July 26, 2022

Da Nang tourism has witnessed a strong bounce back of both international and domestic travel. For the first half of 2022, the city received a total of 1.33 million tourist arrivals served by established accommodations, up by 26% y-o-y; in which, 1.27 million domestic travelers were recorded, up by 39.5% y-o-y while there were 57,800 foreign visitors, down by 34.3% y-o-y. International tourists has significantly picked up since Q1/2022 as Da Nang fully reopened aviation and tourism. MICE guest number recorded within 21/02 – 21/05 jumping eight-fold compared to the same previous last year.

Such vibrant tourism promoted service businesses. In the first half of 2022, revenue from accommodation, food services, travel and tourism support activities hit about VND 8,329 billion, increased by 13.2% y-o-y. Thanks to high-spending travelers such as MICE guests, family groups staying at 3-star hotel and above, together with foreign tourists, the city tourism revenue has made great breakthrough.

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Da Nang 4-5 Star Hotel Market

In the first half of 2022, there were two new properties, Radisson Hotel Da Nang (182 keys) and Mikazuki Da Nang (294 keys). As accumulated, Da Nang 4 – 5 star hotel market has total of 81 projects with 15,343 keys. In which, the number of 5-star and 4-star room count accounted for 38% and 62%, respectively.

Due to the outbreak of Covid-19, lodging business has been adversely affected. ADR and occupancy significantly declined by 40% and 53 ppts in the period of 2020 – 2021, respectively. Moving to 2022, as Vietnam fully reopened its borders, market performance of upscale hotel gradually got improved. For the first six months of 2022, in Da Nang, ADR averaged at US$70/room/night, up 11% y-o-y and occupancy rate was reported at 26.3%, up by 15 ppts y-o-y. ADR has quickly regained its growth momentum, reaching over two-thirds of the pre-pandemic level while occupancy registered 42% of what has been seen in 2019.

For the rest of 2022, Da Nang expects to welcome 10 new properties with 2,442 keys, lifting the total supply to 91 properties with nearly 18,000 keys. New launches gives a stimulus to the market; however, the overall performance could not fully recovered as being under pressure of unpredictable Covid-19 outbreak on global scale. For 2022, ADR is forecast to rise by 30% y-o-y, standing at US$79/room/night and occupancy would be reported at 53,2%, up by 43,5 ppts y-o-y.

Da Nang remains to be one of the most appealing holiday destination in Vietnam. In the period of 2022F – 2024F, many prestigious hoteliers continue to increase their visibility in Da Nang, with more brand names to be introduced such as Mandarin Oriental, JW Marriott, M Gallery, Le Méridien, Wink Hotels, lyf by The Ascott Limited, etc. In 2024, Da Nang 4 – 5 star hotel market is projected to have 99 properties with over 21,000 keys in total. The greater number of branded projects enhance the upscale hotel market performance. Following that, ADR is expected to increase at CAGR 2021 – 2024F of 25%/year, possibly reaching US%119/room/night in 2024. Occupancy will rebound to pre-pandemic level of 63%.

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Da Nang Vacation Property Market

New supply in Da Nang vacation property market remains limited. In the first half of 2022, there was only one newly-launched condotel project which is Felicia Da Nang (70 units launched in the first phase). As of now, the city has total of 7,384 condotel units (from 16 projects) and 2,522 vacation villas (from 13 projects).

For the past three years, Da Nang condotel market had few projects opened for sales. Hence, the primary price hovered at CAGR 2019 – 2021 of 4%/year and currently stood at US$2,431 psm NSA. The accumulated sold rate was reported at nearly 85%. In the same review period, vacation villa segment recorded no new supply. Primary price remained unchanged and averaged at US$2,724 psm GFA. The accumulated supply reached about 91%. Limited new launches, together with cautious approach by majority investors, are main reasons why sales activities are still quiet even when tourism has bounced back.

Since August 2021, Da Nang has stopped licensing new condotel projects to address the mismatch of supply and demand after booming for quite a long time. A majority of new supply only came from previously-approved projects or the remaining parts of previously-launched ones. From 2022F – 2024F, Da Nang is expected to have an extra of 1,800 condotel units and the primary price would increase at CAGR 2021 – 2024F of 3%/year. Condotel has long been developed and is entering stabilized phase. The lack of proper legal framework remains a major barrier for the vacation property market to regain momentum. This explains why given such slowdown in the new supply, market-wide primary price would hardly experience any fluctuations and keep stable instead. The accumulated sold rate could register 91% within the next 3 years.

New launches for vacation villa segment is also getting scarce. Well-branded projects are key contributors to future supply and will be sold at quite high price level. In the next 3 years, primary sales is forecast to rise at CAGR 2022F – 2024F of 5%/year.

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Da Nang Condominium Market

For the first half of 2022, no newly-launched projects are recorded. As of now, Da Nang has the total of 7,378 condominium units from 20 projects.

In the period of 2020 – 2021, even during the pandemic time, several projects were introduced. Market-wide primary price averaged at US$1,475 psm and grew at CAGR 2019 – 2021 of 8%/year. Primary price currently stood at US$2,100, US$1,300 and US650 psm for high-end, mid-end and affordable segment, respectively. High-end products rose at the highest, with CAGR 2019 – 2021 of 6%/year, mainly thanks to two projects, The 6Nature and The Sang Residence sold at relatively higher than the price range of similar-grading ones in Da Nang. Affordable segment witnessed almost no fluctuations. Meanwhile, primary price of mid-end segment slightly went down as FPT Plaza 2 offered 700 units for sales at quite lower than the same-grading peers. The sold rate accumulated at 92%. For the past three years, thanks to such steadily increasing number of newly-launched projects and units, there was no oversupply situation, which in turn supported healthy absorption rate.

In upcoming time, Da Nang condominium market is expected to get more thriving, with 10 new projects to be launched, providing an extra of 5,600 units. This marks the CAGR 2021 – 2024F of 22%/year. Luxury apartments will take the lead, promoting the market-wide primary price growing at CAGR 2021 – 2024 at 12%/year. The condominium sector would be soon reshaped as riverside apartment projects have gained in popularity. Those iconic buildings play vital role in delivering high-class living standards.

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Da Nang Landed Property Market

In the first six months of 2022, the city had Sunneva Island firstly launched in Q2 2022, with 106 units including villas and townhouses. The remaining phase from Regal Pavillion contributed 34 shophouses to the whole supply. As of now, Da Nang landed property market has total of 1,624 units (villas, townhouses, shophouses).

In the period of 2019 – 2021, there were no new supply of villas and townhouses; hence, market-wide primary price kept nearly unchanged, reported at US$3,300 and 3,450 psm land. New launches from Sunneva Island in the first half of this year pushed up price range to US$3,780 for villas and US$3,900 psm land for townhouses. Regal Pavillion was firstly introduced last year, sold at over US$6,500 psm land, thus leading to two-fold increase in market-wide primary price for shophouse segment during the period of 2019 – 2021.

On the back of steady supply by years, the accumulated sold rate stood at 92%. New launches in the early stage of this year also attracted a huge number of investors, thanks to high-quality products and the developers’ reputation.

In upcoming time, few projects are expected to be opened but there will be a diversity of product types, providing the public with more options and thereby promoting sales activities. Da Nang has focused on building up riverside urban areas with extensive facilities. Majority future supply of landed property lie in prime location and are well-planned; hence, those are projected to be sold at quite high price. Following that, market-wide price significantly gets improved and rise at CAGR 2021 – 2024F of 9%/year.

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Da Nang Property Market Outlook

The decentralized trend has emerged in Da Nang, similar to what has been observed in Hanoi and Ho Chi Minh City. Currently, a majority of existing projects concentrated in CBD areas or scattered along My Khe beach. In the next phase, the city will expand development space towards Northwest and Southeast areas, especially promoting the establishment of satellite urban areas. Northwest region is home to many industrial/high-tech parks, and is also the intersection of key traffic projects, thus owning convenient linkage to the nearby locations and the city center. Many developers have flocked there with the intention to build up township developments and hospitality complexes to catch the upcoming wave of high-quality residents, especially the expats/foreign professionals working in IPs. Southeast region is well-connected to the neighboring province, Quang Nam, which could easily form an urban - coastal strip. Therefore, this region is oriented to develop eco-tourism urban areas, especially the location along the Co Co River where having great advantage of the landscape. The existing limitation of Northwest and Southeast regions is the lack of supporting facilities as well as the need for more infrastructure improvements (Co Co River dredging project) to optimize the development potential.

Da Nang will soon witness the blooming of riverside apartments and urban areas developments. These are iconic projects, well-invested in terms of design and product quality. This trend indicates that Da Nang has been gradually shifting its development direction towards a more sustainable direction, focusing on luxury apartments and high-class urban areas to enhance the positioning of Da Nang property market. In reality, riverside properties have been gaining traction; hence, the launching of these new projects will boost up sales activities and at the same time help Da Nang quicky regain its growth momentum after a after a relatively quiet period.

“Staycation” or “workstation” holiday continue to be on the rise, even during the post-Covid-19 time. Da Nang market is forecast to welcome multiple new projects to stay tuned with this new trend. Such diversification regarding vacation product types helps this city to lure more guests to come and stay. A number of new hotel brands, with a youthful and modern style, will soon enter Da Nang, targeting Millennials and Gen Z, who are keen on mobility cultures and flexibility. These new projects will pay more attention to creating private space for guests to stay, while still ensuring such well-designed common living spaces and co-working spaces for them for efficient workstation mode.

According to Ms. Duong Thuy Dung, Executive Director, CBRE Vietnam: "After the pandemic, Da Nang property market has made speedy progress, gradually strengthening investment attraction to this city. Given the smarter and more sustainable development orientation, in the next phase, Da Nang will pay more attention to promoting high-class residential products, which goes in parallel with great efforts to fostering the tourism and vacation property sector. This helps improve the provincial competitiveness while boosting market resilience in the longer run.”

Notes on CBRE condominium ranking criteria:
1. Luxury: projects that have primary prices over US$3,500 psm
2. High-end: projects that have primary prices from US$1,500 psm to US$3,500 psm
3. Mid-end: projects that have primary prices from US$800 psm to US$1,500 psm
4. Affordable: projects that have primary prices under US$800 psm
(Selling price excludes VAT)
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.