A condotel development project in the south-central coastal city of Nha Trang. The market continues to face challenges due to large inventories. (Photo: VNA) Despite recent positive news about government regulations grantingownership titles to condotels, only 122 units were sold in the second quarterof 2023.
According to a report by real estate consultancy firm DKRA Group,the inventory of unsold units topped 42,300 as of June, far exceeding thecombined inventory of beach shophouses and resort villas.
Developers are struggling to sell them and bear the financial costof bank loans taken to develop these projects, it said, adding sales of existing condotels have been extremely slow this year,impacting both the primary and secondary markets.
Investors are finding it increasingly difficult to sell theircondotels at a profit, leading them to accept lower rental returns.
Trang Bui, CEO of Cushman & Wakefield Vietnam, attributed thechallenges faced by the market to multiple factors, including the pandemic'simpact 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 anddevelopers' ability to develop and operate projects.
A successful project must have a prime location, a range of amenities andprofessional management, and investors must have close co-operation with travelfirms.
Vo Hong Thang, director of the consulting & project development division atDKRA Group, said a boom in the condotel segment in recent years has led to anoversupply.
The lack of specific regulations and standards for condotels andthe failure of developers to fulfil profit commitments have significantlyeroded investor trust, he said.
Their extremely high prices make for unattractive returns oninvestments, he said.
“Investors will need 40-50 years to recover their investment, making it anunsustainable option.”
The recovery of the real estate market will likely begin with residentialproperties that serve essential needs, while resort properties like condotelsmay take longer to regain balance, experts said.
To restore investor trust, it is crucial to implement specific regulationsregarding condotel standards and ensure developers fulfil their profitcommitments, they added.
While the government has recently issued a decree on granting ownership titlesto condotel buyers, further guidelines are needed for the process to get underway, according to Thang.
Under the decree, properties such as condotels, officetels and resort villascan get ownership certificates.
According to the Vietnam Real Estate Association, there are around 240 tourismproperty projects with around 114,000 condotels worth an estimated 297 trillionVND.
They are mainly located in areas with strong tourism markets suchas HCM City, Hanoi and Da Nang cities, and Binh Dinh, Khanh Hoa, Binh Thuan,and Ba Ria-Vung Tau provinces./.
VNA
