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Danang hotel market: The supply increases, the rental prices increases still up 18%

rents at hotels in Da Nang increased, leading to room revenue increase

Contrary to reviews and warnings of hotel oversupply in Da Nang, Savills latest report shows a reality: capacity and rental prices are increasing.

According to statistics, by mid-2016, the total number of tourist accommodation in Da Nang is approximately 535 hotels, resorts with 20,166 rooms. Of these, 1-2 stars and the equivalent of 425 hotels with 9,411 rooms.

Da Nang hotel market is quite bright in Q4 / 2016
Da Nang hotel market is quite bright in Q4 / 2016

Along with the increase of tourists in recent years (in 2016, Da Nang welcomed more than 5.5 million domestic and international tourists) in Da Nang is currently the situation of massively build customers.

The record shows that there are dozens of mini hotels, from 10 to 50 rooms are still under construction along the km sea route of Son Tra Peninsula.

The wave of massive construction has pushed the price of land here continuously escalating. In particular, the highest increase was in Vo Nguyen Giap road, Bach Dang street near Han river, Vo Van Kiet street and Nguyen Van Linh street with 2-3 times increase compared to the previous 12 months. The highest transaction price can be up to VND 100-150 million / m2.

This has raised concerns about the risk of excess supply of hotels leading to capacity depletion and rental crisis. The fact that hotel sales are taking place is quite popular in Da Nang.

However, it is worth noting that in the report of real estate market in Q4 / 2016 of Savills Vietnam, this unit recorded the average occupancy rate of hotel increased 4 percentage points per year; Average rents increased by 18% y / y due to the increase in prices of all segments; and average room sales up 26% year on year.

rents at hotels in Da Nang increased, leading to room revenue increase
rents at hotels in Da Nang increased, leading to room revenue increase

Savills also said that in the fourth quarter of 2016, hotel supply stood at 9,030, up 5% quarter-on-quarter (with 4 rated 3 and 4 star hotels) and 19% year-on-year.

It is forecasted that in 2017 there will be nine 4 to 5-star hotels with about 2,200 rooms entering the market.

In addition to the positive signal about the hotel market, Savills reported that the brightest segment of the resort, when in the fourth quarter of 2016, the total supply of hotel apartments reached about 3,910 apartments from 10 projects. Of that, the primary stock was at 1,325. Son Tra district is leading in terms of supply with 50% market share, followed by Ngu Hanh Son district with 44% market share.

The market for resort villas reached 774 units from 14 projects, of which only 153 units are on the primary market. The largest supply in the Ngu Hanh Son district with 728 units (94% market share) from 12 projects, followed by Son Tra district with 46 units (6% market share) from 2 projects.

Total supply of apartments for sale reached 3,495 units from 15 projects, including 520 units on the primary market. Ngu Hanh Son district, with 30% of total supply, followed by Son Tra, Hai Chau and Thanh Khe districts.

However, the Savills report showed a decline in the office segment as average rents fell 9% year on year. Even to compete and attract tenants, some buildings have reduced rental rates by up to 30%.

Retail space segmentation also experienced a decline in average floor rents of -7.9% quarter-on-quarter and -4.2% year-on-year, while average occupancy rates declined -2.9%. , 2 percentage points on a quarterly basis and -1.7 percentage points on a yearly basis.

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Danang hotel market: The supply increases, the rental prices increases still up 18%
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