Rounding out a legal framework for vacation properties

Will foreigners be allowed to buy condotels?

No loopholes for condotels: HoREA 

In the near future the supply of condotels in Da Nang will continue to expand, leading to fiercer competition. — Photo batdongsanexpress.vn

Due to the unclear regulations on condotels, the market in Da Nang slowed down in the first quarter, according to Colliers International Vietnam’s Quarterly Knowledge Report.

Buyers are becoming more cautious about developers’ promises of lofty returns, and developers themselves are also adopting caution before introducing new products, the report on the first quarter real estate market said.

Though the future of condotels is unclear, investors evidently have persistent interest in the potential for future returns.

In the near future the condotel supply in Da Nang will continue to expand, leading to fiercer competition between developers.

Thus, new projects will have to differentiate themselves by unique design and attractive sales policies.

The average condotel absorption rate in Da Nang remained high at more than 80 per cent due to the trust investors seem to have in the market’s potential for long-term returns.

Condotels in Hai Chau District recorded the highest absorption rate at almost 90 per cent, followed by Son Tra District and Ngu Hanh District with 73 per cent and 71 per cent.

The average primary price reached US$2,250 per square metre at the end of March.

The demand for condotels came mostly from investors in the north, particularly Ha Noi, who accounted for more than 80 per cent of the buyers.

Da Nang is seen as an up-and-coming coastal city with excellent transportation infrastructure, a big increase in the number of international flights and a steady rise in the number of visitors.

The second home-villa supply is extremely limited in Da Nang with only 60 projects, all in Ngu Hanh Son and Son Tra districts.

On average, the asking price in Da Nang ranges from $1,100 per square metre to more than $2,200.

Key drivers of success for properties are the developer’s reputation, sales policies and proximity to the beach.

In the city more than 95 per cent of second home-villas have been sold out.

With announcements about future supply not made, it is expected the current lack of supply will persist.

According to Savills report, in the second half of 2018 a total of 14 projects supplied condotels.

No new projects or phases have been launched.

Ngu Hanh Son District accounted for 52 per cent of the condotel supply.

In the second half of last year the absorption rate increased by 9 percentage points due to limited primary supply.

Prices were $1,800-3,800.

Starting this year 16 projects will be completed and come online.

In the second half of last year villas were supplied by 16 projects.

Ngu Hanh Son District was again the largest supplier with a 91 per cent share from 13 projects.

In 2019 45 projects will be completed.

There were approximately 13,400 hotel rooms at the end of 2018.

This year 2,200 three- to five-star rooms will come online. — VNS