Phu Quoc Island’s Property Supply Outpaces Tourist Demand as 17,600 Beachfront Properties See Occupancy Rate Below 30%

• 21 August 2023
• International News
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Phu Quoc Island, a gem of natural beauty and tourism allure, finds itself at a real estate sector crossroads. As of June 2023, over 17,600 beachfront properties, constituting 24% of the total supply remained unsold. The languishing unsold beachfront villas, shophouses, and condotels, present a clear picture of oversupply in the market. This burgeoning supply has been expanding by an annual average of 70-80%, signaling the need for a recalibration in the industry, according to e.vnexpress.net on 16 August 2023.

The root cause of the market downturn and burgeoning inventories lies primarily in the abundant supply and a lack of distinctiveness among most properties, according to experts. In 2019 alone, more than 4,000 beachfront properties were introduced, a fivefold increase from the previous year.

Mauro Gasparotti, Director of Savills Hotels Asia-Pacific, emphasized the worrisome oversupply in Phu Quoc, particularly in commercial townhouses. Furthermore, many properties lack unique features, often mirroring European architectural styles that struggle to resonate with foreign tourists.

DKRA, a prominent real estate consultancy, highlights a key mismatch, saying, “The pace of tourism project development outstripped the growth in tourist numbers since 2017. Phu Quoc currently boasts 286 tourism investment projects across 9,600 hectares, requiring an investment of VND375 trillion (US$15.9 billion). Of these projects, 47 are fully completed, 78 are under construction, and the remainder are undergoing final investment procedures, according to the Phu Quoc Economic Zone Management Board.”

Vo Hong Thang, Deputy Director of R&D at DKRA Vietnam, underscores a sobering reality, explaining that, “Even during peak seasons, boutique hotels, villas, and mini-hotels only attain occupancy rates ranging from 28% to 32%, with domestic tourists constituting the majority.”

He added, “When occupancy hovers below the 30% threshold, profit margins become razor-thin, ranging from 0.5% to 1%.”

Thang forecasts a minimum three-year timeline for the Phu Quoc beachfront property market to rebound.

• Analysis