After a three year boom, in mid-2019, the condotel market suddenly received irs first shock: the local authorities revoked the certificate for long-term land use rights from a project in Da Nang and gave a certificate for fixed-term (50 years) land use rights instead.

Explaining the decision, the local authorities said the condotel products are developed on t
land reserved for trade and service purpose, so users only have the right to use it for 50 years, not for an indefinite time.

Immediately, the shock caused the condotel market to decline. Many investors have been withdrawing capital from condotel projects, while others have bargained products away. Some projects have been marketed with attractive profits of 8-12 percent per annum committed by investors, but the interest in these projects is very weak.

Phan Thiet, Quy Nhon and Vung Tau, which were considered the new condotel markets, have also become weak. 

After a three year boom, in mid-2019, the condotel market suddenly received irs first shock: the local authorities revoked the certificate for long-term land use rights from a project in Da Nang and gave a certificate for fixed-term (50 years) land use rights instead.

The market is still facing difficulties. In late 2019, Cocobay, a ‘super-project’ in Da Nang collapsed as the investor failed to implement its commitment about profit.

The event dealt a strong blow on the condotel market. Real estate developers called for help to ‘save the market’, while experts called to set up a clear legal framework for condotels.

After discussion, the Ministry of Natural Resources and the Environment (MONRE) on February 14 sent a document to local departments, providing guidance on land use regimes and the certification of non-residential construction facilities ownership for condotel, tourist villa, and officetel projects.

The document says the usage time of condotel is 50-70 years.

Analysts commented that the legal document would help revive the condotel market after a period of stagnation because of legal problems.

However, some investors remain cautious when asked if the condotel market will warm up. They said the resort real estate market has experienced too many difficulties recently so it would be better to keep ‘wait and see’ attitude.

Meanwhile, Ngo Huynh Phuong Thao, director of TAT Law Firm, said MORNE’s document hasn't set up new regulations, but it just guides implementation of existing laws. In conclusion, Thao said the controversial legal issues remain unsettled.

Nhip Song Tre quoted L.V.H, an investor in HCM City, as saying that thousands of investors are reluctant to pour money into this type of property. Meanwhile, those who incurred heavy loss in the past still cannot regain confidence to return to the market.

Linh Ha 

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