Investors have once again shown interest in condotels as the legal issues for this kind of real estate product have been clarified. However, the market remains cool.
DKRA Vietnam predicted that the supply would increase in Q2 with 200-300 beachfront villas and 600-800 condotels to be marketed. It said the projects would be located mostly in the developed markets of Binh Thuan, Khanh Hoa, Phu Quoc, Ba Ria – Vung Tau and Da Nang.
Investors are returning as Covid-19 has been controlled in Vietnam and tourism is expected to recover soon.
The Ministry of Natural Resources and the Environment (MONRE) earlier this year sent a dispatch to local authorities guiding the granting of certificates on non-housing construction work ownership to some new types of real estate, including condotels, tourism villa and officetels.
Thoi Bao Kinh Te Sai Gon quoted experts as saying that favorable legal policies and high-quality projects would create a firm foundation for the resort real estate market to develop after Covid-19.
Le Hoang Chau, chair of the HCM City Real Estate Association, said the market fell into difficulties because investment projects violated the laws, causing losses to secondary investors. However, as the problem has been settled and the state management agency will grant ‘red books’ (land use right certificate), the market will become busy again, especially when tourism recovers.
Worries still exist
|Though the legal framework for condotel has been created and the market is expected to grow rapidly in the time to come thanks to tourism development, investors are still hesitating to pour money into condotels.|
Though the legal framework for condotel has been created and the market is expected to grow rapidly in the time to come thanks to tourism development, investors are still hesitating to pour money into condotels.
Investors are concerned about the commitments about profits, guidance about the granting of red books, and complicated procedures for project transfer.
In recent months, FLC Homes sent a document to clients informing them about the delay in the payment of committed profits. The move has raised questions about the real recovery of the condotel market.
Dang Quynh Nhu, an investor, said her condotel in Nha Trang has been receiving guests since early 2019. Many foreigners who cannot return to home countries because of Covid-19 have shifted from short-term to long-term leasing.
However, Nhu is concerned about her business because condotels heavily depend on tourism development.
Le Vu Phuong, an investor in HCM City, said he is still undecided about whether to invest in a condotel in Vung Tau City.
“A representative of MONRE said the granting of a red book to a condotel is not the same as the granting of a red book to apartments. So the legal status of condotels remains unclear,” he said.
Several years ago, a large wave of condotels was introduced to the market across Vietnam.
Experts believe the State's issuance of ownership certificates for non-residential real estate projects will solve existing difficulties in Vietnam’s real estate market.