The condotel market cools

According to the Vietnam Real Estate Association (VREA), another 1,000 condotels were put up for sale in the third quarter, raising the total number of condotels for sale to 12,000. However, the rate of successful transactions is only 20 percent.

Considered one of the most attractive destinations in Asia, Nha Trang plans to receive 6.5 million travelers in 2018. The strong tourism development in recent years has prompted investors to pour capital into condotel projects.

Nha Trang City and the tourism site on Cam Ranh peninsula (Bai Dai) would have 12 more condotel projects with 12,200 condotels in 2019-2020. 

Except for The Arena in Bai Dai with 5,000 condotels, the other 12 projects are located in Nha Trang City, including Scenia Bay Nha Trang with 704 condotels, HUD Building Nha Trang (490) and Nha Trang City Central (209).

However, the sales have slowed down. Only 789 condotels were traded successfully in the third quarter, much lower than that of the first and second quarters.

Phan Viet Hoang, secretary general of the Khanh Hoa provincial real estate brokerage association, confirmed the sharp fall in the number of condotel transactions, saying that buyers now are examining the legitimacy of projects before making transactions.

VREA attributes the decrease in condotel transactions to weak capital flow as commercial banks have tightened lending to the real estate sector. Besides, the legitimacy of condotels still has not been clarified

Another important reason is that the selling price of resort real estate has been pushed up to high levels, VND35-50 million per square meter.

The director of a commercial bank told Nguoi Lao Dong dong that in most projects, enterprises only have part of capital needed to develop projects. The remaining capital is from secondary investors (buyers). 

In principle, enterprises can borrow money from banks to develop projects. However, they have to satisfy many requirements to access bank loans. They have to prove that their products can be sold. 

A banker said in general banks do not want to lend money to condotel investors because the legal framework on condotels remains unclear, which may lead to disputes.

Besides the 12 condotel projects, Nha Trang still has hundreds of other condotels which have become operational. There are also other projects under construction, including Napoleon Castle Nha Trang with 824 condotels and Swisstouches La Luna Resort Nha Trang with 2,000 condotels.

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