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Danang, Vietnam: why foreign investors should pay attention

With world-class leisure and heritage attractions allied to a friendly investment climate, Danang continues to go from strength to strength.

[caption id="attachment_57185" align="aligncenter" width="740"]TBone Lee/Shutterstock Panoramic view over Danang. Image credit: TBone Lee/Shutterstock[/caption]

Among Vietnam’s most eulogized areas is its central coast. With Danang – the country’s fourth largest city and, due to its first-rate (and soon to be expanded) airport, a thriving international gateway – as its chief hub, the area encompasses some of the country’s most attractive beachside real estate.

In addition, it boasts world-class heritage attractions and leisure options that range from golf courses and casinos to cooking and photography classes and bicycle rides around the bucolic countryside.

While these lifestyle benefits are undoubtedly a major draw, another thing working in Danang’s favour is the investment friendly policies of its local government.

Out of 63 provinces in Vietnam, Danang has topped the PCI (Provincial Competitiveness Index) from 2013 to 2015. The PCI ranks the performance, capacity and willingness of provincial authorities in creating a favourable business environment for private sector development.

The PCI assesses each province by looking at its business entry costs, accessibility to and security of land, business transparency, time-efficiency in administrative procedures, and quality of support services. Based on the criteria, Danang has the best business environment, due to the city authorities’ constant efforts in administrative reforms and commitment to developing a business friendly environment.

“These initiatives put Danang ahead of other provinces in Vietnam for the ease of doing business,” says David Lim, managing partner of Zicolaw Vietnam, a firm that provides legal knowledge and advice to local and foreign investors.

Unsurprisingly, this favourable climate is piquing the interest of investors from around the region.

[caption id="attachment_57187" align="aligncenter" width="740"]EQRoy/Shutterstock Danang is benefitting from it's connectivity, and its airport is soon to be expanded even further. Image credit: EQRoy/Shutterstock[/caption]

Like Bali in Indonesia and Phuket in Thailand, the resort residence market in central Vietnam is particularly vibrant with buyers from Hong Kong, Singapore, Korea and Japan (all benefiting from direct air links to Danang) ploughing money into the area over recent months.

“Since the easing of restrictions for foreign buyers in July 2015, Danang has been in the spotlight for resort property investors from across Asia and beyond,” comments Timo Schmidt of Savills Vietnam. “Lifestyle buyers who are seeking holiday homes with an experienced operator and attractive returns have been moving fast in the aftermath of the law change. We are seeing a stronger focus on the luxury segment with multi-million dollar transactions now happening regularly.”

More: Property is the second most attractive sector for Vietnam FDI

Like other major centres in the country, Danang was badly impacted by the collapse of the real estate market in Vietnam a few years ago. Rising inflation prompted banks to tighten lending, bringing the real estate market to a near standstill. Activity started to pick up again throughout the country in the final quarter of 2013 as lending rates improved and developers and real estate agencies – long dispirited by the stagnation of the market – once again have a spring in their step.

Nowhere is this more noticeable than in Danang, where signs that the market is picking up again are plentiful.

Wealthy investors are targeting prime resort residences at properties such as Intercontinental Sun Peninsula, The Nam Hai and Naman Resort.

While these properties are, by now, well established, Danang is gearing up for the next big wave of resort residences with a variety of projects in the pipeline.

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At the Intercontinental Sun Peninsula, Sungroup’s Phase II of the Sun Peninsula Heritage Villas is one of the most anticipated launches on the central coast and has already garnered interest amongst high net worth individuals and family offices prior to its launch in October.

Designed by Asia-based starchitect Bill Bensley and located on a private headland, these two- to three-bedroom villas are each expected to fetch between USD3-4 million.

Other notable movements in the market include the re-launch of the Ocean Estates. The 33-villa compound, located adjacent to Danang Golf Club, is the only villa project in the area not managed by a hotel operator. The large Balinese-style properties offer flexibility to owners, who can buy to let or use the villas as year-round residences, and are reasonably priced between USD700,000 to USD1.2 million.

More: Vietnam’s real estate dragon ascends

Over the next year, other beachfront projects are expected to enter the market, notably Hoi An South, an integrated resort project comprising a casino, several four-to five-star hotels, golf course and a variety of villas for private ownership.

Resort residences are not the only show in town however. International buyers are also active in the mid-market with a preference for developments that are close to completion. New Hoi An City and Alphanam Luxury Apartments have been selling well in this segment, both providing management services and a wealth of resort facilities while offering easy access to the beach.

[caption id="attachment_57191" align="aligncenter" width="740"]View over Danang from the marble mountains. Romas_Photo/Shutterstock View over Danang from the marble mountains. Image credit: Romas_Photo/Shutterstock[/caption]

Alexander Schmid, a Dubai-based Swiss investor who owns two properties at the Hyatt Regency Danang residences, including a penthouse, is among those to have taken advantage of Vietnam’s looser restrictions on foreign ownership.

"I invested as one of the first foreign buyers,” he says. “Having travelled to various resort destinations across the globe I realized that Danang had excellent prospects to become one of Southeast Asia's foremost resort choices for international tourists. While I saw the tremendous potential for capital appreciation, my main objective was the lifestyle that the area offers. I'm spending several weeks each year in Danang and enjoy each stay. In fact, I regard it as my second home."

More: Danang, ascending: Vietnam’s third largest city takes the spotlight

Next year marks another milestone in Danang’s emergence as a key player in the region when it hosts the Asia Pacific Economic Cooperation (APEC) leaders’ forum.

To welcome the heads of the forum’s member nations as well as participating delegates, city officials have approved a project to upgrade 34 major roads in the city to the tune of USD$10.9million.

The construction of the international passenger terminal at Danang International Airport, which broke ground on November 15, 2015 with investment capital of USD$157 million is also slated for completion in March next year. The new terminal, with a capacity of four million passengers a year, will exclusively service international flights while the existing terminal will become domestic.

In Danang life rarely stands still. The streets of the city are a blur of motorbikes and colourful markets. These are familiar sights in Vietnam, but it is the wealth of fresh investment prospects on the central coast that are truly indicative of a region that is going places.

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