The resort real estate market has been shocked by the information that the developer of the 51 hectare resort and entertainment complex in Da Nang – Cocobay – announced the termination of payments of committed profits for condotel products due to financial difficulties.

The breaking of the project's profit commitment for the project with investment capital of $5 billion has dealt a strong blow to the quiet condotel market.

The confidence in committed huge profits of this investment channel has been shaken. Many investors are considering running away or withdrawing capital from the project for fears about financial and legal risks.

In 2015-2016, Bavico Nha Trang project at No 2 Phan Boi Chau, Nha Trang City, once stirred up the public when its developer offered to sell condotels with the high committed profit of 15 percent per annum.

The resort real estate market has been shocked by the information that the developer of the 51 hectare resort and entertainment complex in Da Nang – Cocobay – announced the termination of payments of committed profits for condotel products due to financial difficulties.

Later, the developer lowered the committed profit from 15 percent to 8 percent. However, even with the profit cut by half, the developer also cannot pay in recent years.

In May 2019, Bavico buyers lodged complaints to a series of agencies, asking for help as they did not receive the committed profit for a long time.

An analyst commented that the short ‘honeymoon’ period of the condotel market has ended. The huge committed profit which developers used as a triumph card to persuade investors to buy condotels, has become a big concern.

Investors rushed to buy condotels in 2015-2016, when developers committed huge profits. In 2017-2019, the profit payment is unstable and the risk is completely in buyers' favor.

Meanwhile, investors cannot sue the developers because with the clauses in the contracts signed between the two parties, buyers would be put at a disadvantage, according to Lawyer Nguyen Sa Linh from Gia Linh Law Office.

In Phu Quoc market, the highest committed profit level is 12 percent, and the payment lasts 5-10 years depending on the agreements between developers and investors, while the average committed level is 9-10 percent.

In Ba Ria – Vung Tau, the average committed profit level is 8-9 percent per annum, while some developers affirm that investors would take back the investment capital after 8-10 years.

The central provinces/cities of Khanh Hoa, Phan Thiet and Da Nang are the most bustling markets with huge committed profits of 12-15 percent.

Huynh Phuoc Nghia from the HCM City Economics University said the Cocobay scandal would lead to two things. First, project developers will have to change their sales strategy and restructure their products. Second, customers will set higher requirements on legality and product quality.

Kim Chi 

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