One of the most fast-paced countries in Southeast Asia, Vietnam is famed for its dynamism and energy.
Nowhere is this sense of perpetual forward motion more apparent than in Da Nang, which continues to go from strength to strength as a business and tourism hub to rival traditional resort powerhouses in the region such as Bali and Phuket.
Blessed with an enviable location on one of Vietnam’s finest stretches of sand, the city offers easy access to an array of draws including world-class golf courses, casinos and the heritage sights in history-steeped Hue and Hoi An.
While its natural and leisure attributes don’t harm its cause, belief in Da Nang’s potential is founded on other key areas.
Developers, tour operators and hoteliers repeatedly credit the party leaders in and around Da Nang and Hoi An with fast-tracking projects, making sure the new airport terminal was built and other infrastructure initiatives fast-tracked.
Out of 63 provinces in Vietnam, Da Nang 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, Da Nang 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 Da Nang ahead of other provinces in Vietnam for the ease of doing business,” says David Lim, managing partner of ZICO Law Vietnam, a firm that provides legal knowledge and advice to local and foreign investors.
“With Da Nang you are getting a really rounded package,” concurs Penny Trinh, country representative for Marriott, which is poised to unveil five new properties on the central coast by the end of 2018.
“Not only is there the beach, the fantastic lifestyle and all the other leisure attractions, it has also become a very easy place for businesses to operate. Many companies, both domestic and international, are opening regional offices in this part of Vietnam. Therefore the supply/demand ratio is
Vietnam as a whole has witnessed a renaissance in investor interest of late. Investors once more have a spring in their step, with factors such as improved lending rates and relaxation in foreign ownership rules contributing to the feelgood factor. In hotel investment news, record levels of activity have taken place during the first half of 2016, which saw over USD230million of transactions across the country – including on the in-vogue central coast.
“Da Nang is very much on the radar of investors given the continued year-on-year increases in market performance,” states Adam Bury, Senior Vice President, Investment Sales Asia at JLL.
“The increase in investment activity is clearly reflective of strong market fundamentals but also reflective of a growing sophistication in the market.”
Next year marks another milestone in Da Nang’s emergence as a key player in the region when it hosts the Asia Pacific Economic Cooperation (APEC) leaders’ forum.
The summit is expected to offer a significant boost to the Da Nang area’s image as a top tourist destination. When Bali hosted the conference in 2013, hotel occupancy rates shot up with around 30,000 rooms used by delegates during the event. The Indonesian island also benefited from major infrastructure improvements carried out ahead of the summit, and Da Nang is expected to benefit similarly.
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 USD10.9million.
The construction of the international passenger terminal at Da Nang International Airport, which broke ground on November 15, 2015 with investment capital of USD157 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.
The existing terminal was designed to handle six million passengers a year. But with a 15 percent annual growth rate in passenger numbers, its capacity is now overstretched.
Da Nang International Airport already services direct flights from Singapore, Korea, Japan, China, Hong Kong, Macau and Malaysia. In 2016, meanwhile, Bangkok Airways launched a direct link between Bangkok and Da Nang.
Da Nang will also benefit from the construction of a 1500-seat, 3922sqm international convention centre – a major potential plus for the MICE market – and a USD2.25 million upgrade to facilities in the city’s Thanh Nien Park.
“With these advances to infrastructure, most notably the airport expansion to coincide with the 2017 APEC Summit, we see no reason why the strong performance run of Da Nang will come to an end,” continues Bury.
Certainly major hotel groups – both domestic and international – are looking far beyond next year’s summit. An impressive contingent of names including global leaders Accor, IHG, Hyatt and Melia, as well as leading Asian based groups such as Minor International and Centarta have a presence on the central coast.
Joining them in the near future will be Marriott, which is set to make its debut in the area with the 390-room Four points by Sheraton and 800-room JW Marriot on My Khe beach in 2017.
“We see huge long-term potential in Da Nang,” continues Penny Trinh. “. With more direct flights operating between major regional destinations and Da Nang, there is likely to be a significant uptick in visitor numbers.
“If visa requirements are also eased – something that is being seriously considered – it will make the central coast of Vietnam as convenient and appealing as any destination in the region.”
Trinh cites the MICE market as one potential growth area. New properties in the area have placed a strong emphasis on catering to MICE clients, with extensive conferencing and meeting facilities. The burgeoning MICE industry has been growing steadily in Asia. According to an ICCA (International Congress and Convention Association) statistics report in 2014, there were over 2,400 meetings held in Asia Pacific & Middle East, which occupied 20% of worldwide meetings. Considered a market leader in Asia, Thailand’s MICE industry generated around USD14 million in the first three quarters of 2015. The industry in Vietnam will be hoping for similar windfalls from Da Nang.
World-class leisure attractions continue to proliferate, with the Luke Donald-designed Ba Na Hills the latest addition to the area’s impressive golf portfolio – one that includes courses designed by legends of the game such as Greg Norman and Colin Montgomerie.
“Da Nang has grown continuously over the years, recording an average annual economic growth of 14% from 1997 to 2012, compared with the national average of 7%,” comments Lim of ZICO Law Vietnam. “Further, the local authority is attracting investments in advanced and green technologies by offering incentives such as tax reduction/exemption and land rental exemption. It is evident that Da Nang is setting a good foundation for long-term development, and coupled together with its business-friendly environment, it is likely that the city will see an increase in foreign investment.”
In Da Nang 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 plethora of fresh investment opportunities on the central coast that are truly indicative of a region that is going places.