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Jul 06, 2018 / 11:00

Green buildings - an indispensable trend for the future: Savills Hotels

A Savills Hotel executive is cautious about the development of condotel in Vietnam.

Real estate models prioritizing green growth and environmental friendliness are the trend that will continue into the future in Vietnam, Director of Savills Hotels Asia Pacific Mauro Gasparotti told Hanoitimes in an interview.
Director of Savills Hotels Asia Pacific Mauro Gasparotti.
Director of Savills Hotels Asia Pacific Mauro Gasparotti.
Do you have any comment on the prospects of the hospitality industry in Vietnam?
The hotel and tourism market in Vietnam is still very potential and maintained a good growth rate in recent years. In the first five months of 2018, international tourist arrivals reached 6.7 million, up 27.6% over the same period last year.
Infrastructure is explored by governments and localities with many projects developed, upgraded and expanded with public or private funds in the form of transfer construction such as airport expansion projects, for example the new terminal in Cam Ranh International Airport has just been put into operation since June 30, 2018.
In addition to familiar locations such as Nha Trang, Da Nang, Phu Quoc, investors are currently developing projects in new destinations such as Ho Tram, Quang Binh, Quy Nhon, Ha Long. Owners and management groups (domestic, regional and international) will promote these new destinations in order to attract more visitors, the resort offers both domestic and international tourists.
With the development of infrastructure and the quality of tourism services, Vietnam will be able to compete with neighboring well-known tourist destinations such as Thailand.
In recent years, a number of international brands have also started investing in the Vietnamese hotel market, how does it affect local brands?
Most international executives enter the Vietnamese market as more managers as investors. Investors have signed up to cooperate with executives in the desire to have their professional and systematic service providers manage their project operations as well as to take advantage of the available brand names of the regulators
When international brands enter the Vietnamese market will of course increase the competitive pressure, but the market needs this competition to be able to work better and more professional. Domestic management units will have to improve the process, improve service quality to compete with international units. Beside the increasing competition, international brands also contribute to attract more tourists, especially international visitors, thereby contributing to the growth of demand.
I think this is absolutely necessary in the current context when the hotel and resort market in Vietnam needs to improve and improve the quality of service to compete with other tourist destinations in the region.
Do you have any comment on the development of condotel in Vietnam?
Hotel apartments are considered "lifestyle" (lifestyle product), when customers want to own a property that they can use for leisure purposes. In addition to their use, these products are very attractive to customers as they can bring income from rental operations. For investors, this product also helps to recover capital faster than the hotel and resort projects, thanks to the cash flow of sales.
However, in Vietnam, developers are focusing on the profitability of condotel products. This makes the majority of buyers see this as an investment channel rather than a lifestyle product. The increase in competition in sales of second homes with the majority of buyers recognizing these products as a form of investment led to a race in sales policy (discount, commitment to profits, revenue sharing, etc.), contributing to increase financial pressure on the investor.
The high commitment to profitability makes the project highly dependent on its ability to operate in the future to fulfill its obligations to customers. However, investors need to understand that the hotel and resort market is very volatile and depends more on other objective conditions such as economic, political and social conditions.
There may be lessons about dependence on some of the major tourist resources of Nha Trang and Mui Ne between June 2014 and June 2015. Due to the impact of the dispute over the East Sea and the depreciation of the ruble, the number of Chinese and Russian tourists to Vietnam has fallen significantly, causing the tourism market of Nha Trang and Mui Ne to be severely affected.
Therefore, the investor should carefully calculate the operating cash flow and operational risk reserve to ensure the ability to pay the commitment to profit.
The condotel model can be very attractive to both customers and investors. However, when choosing a development model, investors should plan well as well as conduct the feasibility study from the beginning to be able to get a product suitable to market conditions, financial ability as well as ensuring good operation in the future.
On the customers' side, when choosing real estate products for investment, it is necessary to consider quality products from reputable investors and thoroughly understand products and sales policies.
In Vietnam, there are not many legal bases for investment in condotel development, do you have any propose on this issue?
The legal basis is very important and I believe the government is also working to research and provide legal basis for the condotel. During this time, I also hope the media can bring the most accurate information, even the condotel warnings to investors, investors more cautious in project development as well invest in these products. Investors will need to carefully study the sales contract, select qualified investors and thoroughly understand the project before purchasing.
How will the appearance of the condotel have impact on other purchasing activities such as housing and trade?
Investors will have more options in diversifying their investment, they may choose land, condotel or condotel, resort villas. In the condotel segment, investors now have many products to choose from in many different locations such as Nha Trang, Phu Quoc, Da Nang, etc. Depending on investment needs and expectations of profitability Investors can choose the right product for themselves.
I think that real estate models must always be improved for the perfect fit with trends. R
eal estate models prioritizing green growth and environmental friendliness are the trend that will continue into the future.
Thank you very much!