Timeshare resorts lure cash-starved investors

Timeshares are becoming increasingly popular with investors who have liquidity but are unwilling to take out bank loans to buy property in its entirety, a source from CB Richard Ellis property developer said.
The are about 50 timeshare resort projects stretching along the Vietnamese coast from south to north. In the nine coastal provinces of Ba Ria-Vung Tau, Dong Nai, Binh Thuan, Khanh Hoa, Phu Yen, Quang Nam, Da Nang, Nghe An, Hai Phong and Quang Ninh there are 10,000 villas and apartments currently on sale.
The new real estate segment, where an investor owns the right to use a property for a period of time, has emerged as a safe investment in the context the global economic downturn, rising local inflation and a stagnant stock market, said Nguyen Tuan Anh, property developer Vinalinks Land's chief executive officer.
In 2008, the State Bank of Viet Nam tightened its monetary policy making it harder to take out real estate loans to cool the feverish market.
However, resort projects have largely weathered the real estate downturn that has afflicted the high-end property market in urban areas, Anh added.
Vinalinks Land, one of the forerunners in the timeshare sector, began construction of Casablanca Villas in March in Dai Lai, in the northern province of Vinh Phuc, 48km west of Ha Noi city centre.
The project, which is expected to be completed in 2014, was the first timeshare in the north of Viet Nam.
The company said it had already issued membership cards to a number of investors.
The 8.6 ha resort has 60 villas.
The eco-resort is attractive to investors because of its flexibility and the relatively low outlay required.
"The timeshare real estate resort project was developed in Europe and the US a long time ago. However, the scheme made its debut, mostly in the south and central provinces of Viet Nam, six years ago," Anh said.
"We want to provide customers with a reasonable and effective investment. A US$3,000-membership card will allow an investor to hold the right to use a villa or a room in the resort for one week annually for 25 years. That of course is much cheaper than buying an entire villa or apartment."
He added that an investor can lease their right to use the property if they don't wish to use it themselves.
These timeshare properties are typically resort condominium units in which multiple parties hold the rights to use the property. Each sharer is allotted a period of time in when they can use it.
Units may be on a part-ownership or lease/right to use basis – where the sharer holds no claim to own the property.
The 60-villa "Mediterranean-style" resort received dozens of orders from investors just one month after construction work began.
Suburban areas in major cities and coastal provinces have become increasingly attractive to investors because of their relatively cheap land price.
Vinalinks Land also offers investors the option of paying about VND5 million ($250) per sq m in a villa, which they will own in perpetuity.
"You can spend VND7 billion ($300,000) to get an ownership of a timeshare villa. Investors can authorise Vinalinks Land to lease the villa or part of the property for a net profit of between $12,000 and $31,000 each year," said Phuong Thao, from Vinalinks Land's marketing staff.
She added that the company was also a member of Resort Condominium International-RCI, which helps provide 4,500 options for customers wishing to swap holiday destinations with other timeshare holders around the world.
Hoang Van Quyet, a private real estate company, is investing in resorts in suburban Lang-Hoa Lac. It predicts that demand for resort villas and apartments would grow significantly over the next 20 or 30 years as infrastructure improved.
"There will be more well-off city-dwellers relocating to quieter, healthier and bigger places. They are able to buy a villa or a house for between VND1.5-2 billion ($75,000-$100,000) in a resort, but they still hesitate because of poor transportation and infrastructure facilities," Quyet said.
"Resort projects are profitable investments as investors can get back their initial capital as soon as they finish the project. However, infrastructure plays an important part," he added.
Along the coast from Da Nang to Hoi An, there are nine resort projects with 500 villas and 2,100 apartments – half of which have been sold to local customers.
SaigonLand plans to offer villas at its 36-property Emerald resort for $1 million each at the end of this year. The company has also launched a 84-ha resort project in Nhon Trach in southern Dong Nai Province.
Le Quang Hang, a real estate analyst, said resort projects were not just holiday homes but investments because they could be sold on or leased.