The Ministry of Public Security has proposed not granting ownership certificates to allow condotels, tourist villas and officetels to be turned into residential projects.
|A condotel project in the central city of Da Nang.|
In its report submitted to the Prime Minister Nguyen Xuan Phuc relating to shortcomings in laws over condotels, tourist villas and officetels, the ministry clarified issues regarding management and trading of the estates.
It said some localities like Da Nang city and Ba Ria Vung Tau province have proposed changing land use purposes and issue certificates of ownership for condotels, gradually legalising them into residential apartments, putting pressure on social infrastructure. This could raise many complex issues about economic and social security.
If the certificate is granted to condotel owners, buyers could mortgage their assets to get loans. This could cause risk of credit insecurity as most investors of condotel products mortgage their projects at banks, the ministry said.
The ministry said many ministries believe they have sufficient legal basis to manage condotel apartments, tourist villas and officetels.
However, construction investment and management of these real estate products have encountered many difficulties which current laws have not resolved.
The Ministry of Construction said they did not prohibit condotels being turned into residential projects but current laws do not provide regulations for the conversion of commercial and service buildings to residential apartments.
Therefore, projects wishing to convert into residential products should be carefully considered and strictly comply with provisions of the law on investment and urban planning.
The Ministry of Natural Resources and Environment (MONRE) in February issued new guidelines about the land-use regime and certification of non-residential construction works, including condotels.
These new guidelines bring positive signs to Vietnam’s real estate market. However, the Ministry of Public Security said in the document, MONRE did not yet clarify whether the property ownership certificate for condotels, officetels and tourist villas will be granted to the project owner or for each apartment.
“In case of granting to each buyer in the project, there would be many complex problems in security and order in the management and operation of the building, as well as withdrawal upon the expiry of the project's land use term,” it added.
Le Hoang Chau, Chairman of HCM City Real Estate Association (HoREA), said they have repeatedly opposed the conversion of condotels into a residential project because these are two types of land with different uses.
He said a condotel is a project belonging to tourism service land. It is developed for Vietnam’s tourism needs, which is developing very fast and needs high-class infrastructure. Meanwhile, housing is the land for residential residents, in addition to accommodation, it needs more public utilities to serve communities such as schools and hospitals.
Therefore, the conversion from condotel to residential projects would create a lack of uniformity in tourism development infrastructure as well as long-term revenue of localities, he added.
Economist Dinh The Hien said the amendments to provisions of laws for this new type of real estate were too late. In fact, there are many types of real estate born before the laws but only on a small scale. This condotel was developed with too large scale in many localities but lacks synchronised laws.
This has not only made it difficult for local management but also for secondary investors. The evidence was that recently, some condotel project owners had broken their commitments when unexpectedly announcing the suspension of profit payment to condotel buyers, he said./. VNA
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.
With the number of foreign travelers decreasing sharply and legal problems remaining unsettled, the condotel market is the 'darkest' part of the real estate market.