A report from Skift on Vietnam. "Massive hotel and resort construction in Vietnam can easily elicit disbelief, and the ensuing dubiety or distrust. The view from Halong Bay until recently was still pristine. Today it’s a huge building site. The new image of Vietnam rolls through its resort destinations. It all seems too much too soon."

"Can all those new hotels, resorts and blocks of condotels be filled, even as recent openings throughout Vietnam’s popular tourist spots are being absorbed by the market? Is it sustainable or will ghost buildings be a major tourist attraction one day? Could it all really be tourism driven?"

"For some, the pace is so unreal that the possibility of money laundering by rich Chinese or Americans have even been murmured to Skift. An owner operating a small hotel in Phu Quoc went down that route in trying to come to terms with calculations he said that didn’t make sense."

"The kind of room rate and revenue per available room (RevPAR) that would be needed to get a return, the critical labor shortage which is shooting up costs faster than you can say 'high rise,' the investment needed to ensure a quality product long after it’s been built, he could go on."

"But consultants and legal advisors to hotels Skift spoke to all say there is a method to the madness, with the exception of the condotels phenomenon. The hybrid of hotels and condominiums is the only 'crazy' thing about the boom currently and could indeed get ugly for small retail investors, say consultants."

"Last year’s 15.5 million international visitors also shows that Vietnam doubled its number of arrivals in just three years. A third of arrivals are from China. South Korea, Japan and Taiwan and the US are others on Vietnam’s top five list."

"Vietnam also relaxed real estate ownership laws for foreign entities and individuals in 2015. This, according to consultants, was the catalyst for the hotel and residential boom, coinciding as it did with interest rates that were at historic lows."

"'There is a lot of money sloshing around looking for a place to land, as it makes little sense to keep it in a bank or to buy bonds, or to lend it out. This is one reason for increased foreign hotel investment in Vietnam, along with (a) a demonstrable demand for more hotels, and (b) a much more favorable regulatory climate for foreign investment,' said Michael Evanoff, chairman of Marlborough Hospitality Services."

"David Keen, CEO of Quo Global, said: 'Phu Quoc and Danang are most exposed as destinations that are being massively over-built. There is a lot of high-end products going into both, without a lot of high-end footfall. Both are already a buyers market, where exceptionally high-end product is available at significantly reduced [rates].'"

"What appears to distort Vietnam’s hotel boom as being off the rails are the condotel developments in these resort destinations, and in Cam Ranh, Nha Trang and Ha Long, that offer local retail investors insane guarantees of nine to 10 percent returns from rentals, for nine to 10 years."

"Built largely by local developers, these projects are funded through pre-sales, thus limiting the developer’s risk as it will have zero capital exposure at the end of the development period other than the guaranteed returns to buyers, said Kenneth Atkinson, executive chairman of Grant Thornton Vietnam."

"However, with the potential of a looming oversupply in many resort areas, then there is the risk of having to fund losses on projects during the early years of operation and whether the developers have adequate financial resources for this potential scenario,' warned Atkinson."

"Added Eric Levy, managing director, Tourism Solutions International, 'Well-located and conceived urban commercial properties and resorts in areas that are building in a sane, sustainable fashion will do well. The disasters are the condotels. The music will stop for some and we will see projects that are suspended or abandoned, a game of musical chairs that will end ugly for some retail investors.'"

"As for the money laundering murmurs by rich Chinese and Americans, the general view is if there was, it’s 'not the overriding development boom/trend,' as Robert Hecker, managing director, Pacific Asia Horwath HTL, said."

"Evanoff said it would take a stupid bandit to do so. 'Upmarket hotels take three years to develop, and then three years to start producing a return normally. Someone wanting to launder money would not have the patience for this, plus with a new hotel, there is absolutely no guarantee of success. Oh sometimes a construction contract is grossly inflated to facilitate money laundering, but this normally involves local or government investment, and a local contractor.'"