Despite recent positive news about government regulations granting land ownership titles to condotels, only 122 units were sold in the second quarter of 2023.

According to a report by the DKRA Group’s research department, the inventory of unsold units topped 42,300 as of June, far exceeding the combined inventory of beach shophouses and resort villas.

Developers are struggling to sell them and bear the financial cost of bank loans taken to develop these projects, it said.

Sales of existing condotels have been extremely slow this year, impacting both the primary and secondary markets, it added.

Investors are finding it increasingly difficult to sell their condotels at a profit, leading them to accept lower rental returns.

Trang Bùi, CEO of Cushman & Wakefield Vietnam, attributed the challenges faced by the market to multiple factors, including the pandemic's impact and the economic recession.

"It is still too early to expect a market recovery for condotels."

The market relies heavily on economic growth, the tourism sector and developers' ability to develop and operate projects.

A successful project must have a prime location, a range of amenities and professional management, and investors must have close co-operation with travel firms.

Võ Hồng Thắng, director of the consulting & project development division at DKRA Group, said a boom in the condotel segment in recent years has led to an oversupply.

The lack of specific regulations and standards for condotels and the failure of developers to fulfil profit commitments have significantly eroded investor trust, he said.

Their extremely high prices make for unattractive returns on investments, he said.

“Investors will need 40-50 years to recover their investment, making it an unsustainable option.”

The recovery of the real estate market will likely begin with residential properties that serve essential needs, while resort properties like condotels may take longer to regain balance, experts said.

To restore investor trust, it is crucial to implement specific regulations regarding condotel standards and ensure developers fulfil their profit commitments, they added.

While the government has recently issued a decree on granting ownership titles to condotel buyers, further guidelines are needed for the process to get under way, according to Thắng.

Under the decree, properties such as condotels, officetels and resort villas can get ownership certificates.

According to the Việt Nam Real Estate Association, there are around 240 tourism property projects with around 114,000 condotels worth an estimated VNĐ297 trillion.

They are mainly located in areas with strong tourism markets such as HCM City, Hà Nội and Đà Nẵng cities, and Bình Định, Khánh Hòa, Bình Thuận, and Bà Rịa-Vũng Tàu provinces. — VNS