There is no doubt the second Trump-Kim summit is political theatre. And while the main actors receive top billing, it is the stage that could be in line for the biggest star turn. With strong economic indicators, a bustling real estate market and a growing tourism industry, Vietnam could be the biggest benefactor when we look back on the meeting of the US President Donald Trump and North Korean Chairman Kim Jong-un in Hanoi.
Initial coverage of the event is likely to be a windfall to the already booming Vietnam tourism industry. According to data from the Vietnam National Administration of Tourism, the country welcomed 15.6 million foreign tourists in addition to the estimated 80 million domestic travellers in 2018. This activity generated VND 620 trillion (USD 26.6 billion) in tourism revenue last year. These numbers were already predicted to increase, but the political summit may help the country surpass initial estimates.
Nguyen Hong Son, Director Advisory Savills Hanoi, noted the second summit in Hanoi has already been drawing significant attention from the global media. This coverage could manifest itself into tangible benefits for Vietnam, even if the talks do not progress into action.
“The first Trump–Kim summit brought a record increase of international visitors to Singapore last year,” Nguyen stated. “The image of a hospitable, safe and peaceful Vietnam will be portrayed and broadcasted all over the world, thus creating a huge opportunity for our tourism industry to attract more international visitors.”
Strong property market in line for boost from Trump-Kim summit
The Vietnam real estate market could also receive more attention in the aftermath of the Trump-Kim summit. Last year saw a record number of foreign property purchases in Vietnam with the country’s luxury residential segment in particular taking off. The uptick in interest from overseas buyers comes on the heels of strong economic growth, work on several large-scale infrastructure projects either beginning or close to starting and rapid urbanisation growth.
“As if Vietnam was not already at the top of many investor’s minds, the country is given a publicity gift in the form of the Trump-Kim summit. After the exceptional 7.1 percent GDP growth in 2018, Vietnam is set to see an unforeseen additional boost in 2019,” Neil MacGregor, Managing Director Savills Vietnam said. “This can only be good for the economy and sectors ranging from manufacturing to tourism. Savills are certainly hoping there will be some positive spill over for the real estate market.”
At the moment, there remains a distinct shortage of prime property in Hanoi and Ho Chi Minh City. Real estate investors can see the potential for significant capital gains over the long term while rental yields remain in excess of 5 percent. This is a little less than what’s seen in the Philippines and on par with Bangkok.
“Although there is still a long way to go for the Vietnam property market to reach the dizzying heights of Hong Kong and Singapore, Vietnam is well on the way to becoming Asia’s next tiger, with strong economic growth, a rapidly growing middle class and, for the time being at least, relatively affordable pricing,” MacGregor added.
The majority of overseas investors have hailed from Hong Kong, China, Japan and South Korea, but the Trump-Kim summit could provide the Vietnam real estate market with a spotlight that draws in interest from elsewhere in the world.
In off-the-record conversations with Dot Property, multiple developers have said demand from foreign buyers already surpasses supply in major cities. Meanwhile, local demand for mid-market properties in both Ho Chi Minh City and Hanoi remains strong.
“This year (2019), mid-end products are expected to keep dominating the Hanoi market with the launch of township developments,” Nguyen Hoai An, CBRE Director at the Hanoi office, told VietNamNet.
Don’t forget about the beach
It’s unlikely Trump or Kim will visit Vietnam’s beaches even though Da Nang was mooted as a potential location for the second summit. However, the costal areas of the country provide both a beautiful retreat and a potential opportunity for international property investors.
For example, Nha Trang in southern Vietnam boasts a beautiful stretch of coastline that spans six kilometres and is regularly ranked among Southeast Asia’s best beaches. According to data from the Khanh Hoa Tourism Department, 4- and 5-star hotels in Nha Trang record an occupancy rate of 65-70 percent throughout the year with this spiking to 95 percent during high season.
And with more arrivals expected, there is room for further growth. The current situation benefits condotel owners and means it is possible to surpass guaranteed investment returns many developers are offering.
The island of Phu Quc, the central Vietnam resort cities of Da Nang and Hoi An and Cat Ba Island in the north are some of the other tourist destinations with condotel projects springing up. While these areas won’t benefit directly from the Trump-Kim summit, an influx of visitors to Vietnam would see at least a few flock to the resort spots.
Notably, most condotel properties allow owners to stay at the project for a set number of days each year, meaning property investment in one of the these areas could double as a holiday retreat. This option makes them even more appealing to buyers from Singapore, Hong Kong and China who may find prices here more competitive than Southeast Asia’s other beach retreats.
