Soon after VinaCapital Real Estate launched the Danang Beach Resort in 2007, the sales results forced the developers to rewrite the business plan.
"The original target audience was mostly international, with pricing starting at $1.2 million," said David Blackhall, the deputy managing director of real estate for VinaCapital Group, the Vietnam-focused firm with $1.7 billion in assets under management.
The 260-hectare mixed development with two golf courses was designed to offer global investors interested in Vietnam the type of resort opportunity they might find in Phuket or the Caribbean. With the first golf course designed by Greg Norman, the beach resort's original layout included 600 residential units.
But when the international market dried up, the developers were surprised to find their sales didn't stop.
Instead, almost all the villa sales--95 percent--went to Vietnamese buyers, particularly investors from Hanoi, Blackhall says. In the last 10 months alone the project has sold 70 units at an average price of $750,000, he says.
The strength of the homegrown Vietnam investment community was not expected, Blackhall acknowledges. And it certainly provides a new twist to the tourism and resort industry in Vietnam, which still limits the ability of foreign investors to own property. News of an active indigenous investor client base suggests a strong, self-sustaining market is developing, and it might spur new activity.
The Danang Beach Resort is the type of ambitious, high-end resort signaling that Vietnam is moving into a new development phase.
Planned to include a top-level hotel, commercial space and a "cultural village," the project is part of an emerging stretch of resorts on the South China Sea, located a short drive from the Danang international airport and the UNESCO World Heritage of Hoi An. The number of visitors to Danang is expected to jump from 1.45 million in 2010 to 3.2 million in 2015, including 700,000 international visitors, according to CB Richard Ellis data. Danang Beach Resort is currently offering 500 units for sale, including Greg Norman branded golf villas. Current pricing is in the $600,000 to $900,000 range for golf and estate villas, with beachfront packages ranging from $1.8 million to $3 million, Blackhall says.
The first golf course is open for business. Thirty villas are finished with another 100 due by the first quarter of 2011.
Foreign direct investment is picking up in Vietnam and "confidence has returned", but the local investors are "far more active than foreign investors at this time," Blackhall says.