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Condotel And Officetel Are Still Risky

Condotel and officetel

According to research by market research companies, despite the increased condotel and officetel supply, demand declined in the third quarter.

Savills estimates that serviced apartments rose 5% quarter-on-quarter and 9% year-on-year to 4,900 units, while average occupancy declined by 1 percentage point quarter-on-quarter. By the end of the year, 200 service apartments entered the market. From now to 2019, this number will increase by 1,500 units from 11 projects.

According to DKRA Vietnam JSC: In the segment of resort villas, about 382 were introduced to the market, down 18% compared with the previous quarter.

This segment recorded the shift of the position of supply when Ba Ria – Vung Tau has an impressive return, accounting for 30% of the total market supply. Followed by Khanh Hoa, Kien Giang, Quang Nam.

The appearance of many new landmarks such as Binh Dinh in the holiday segment proves that investors have started to pay attention to new markets instead of familiar ones such as Da Nang, Phu Quoc, Nha Trang…

Condotel and officetel
Condotel projects continue to increase supply in the provinces with developed tourism

A strong increase of condos in the condotel segment of about 4,096 condotel units (including new projects and the next phase of the old project) increased 2.2 times compared to the previous quarter (1,844 units).

Accompanied by the proportion of abundant supply in general buying power of both condominium and condotel resort is quite low. The market has diversified the big investors, such as Vingroup, Sun group, CEO, BIM … all have better consumption rate than general market.

Mr. Pham Lam – General Director of DKRA Vietnam said: “After 2 years of exciting demand and strong demand (2015 – 2016), resort (villas and condotel) from the mid-2017 signs of cooling by the abundant supply, leading to strong competition.

Another important reason is that the condominium market now needs real-life verification from profit-driven schemes that most projects adopt. There are a number of projects that appear to have problems in the implementation of commitments as well as legal issues, so customers began to have suspicions after the first time excitedly.

With the judgment of Jones Lang LaSalle Vietnam Limited (JLL), investors will have to face the disadvantages when buying this type. As a result, the legal framework for “hybrid” real estate remains unstable and there are still many loopholes that could pose a risk to investors.

For example, the kind of property will coexist with the apartment category and may lead to difficulties in the management of the project. Not to mention, the investors often take advantage of the unstable legal framework to transfer the commercial items in the project to official items to recover capital quickly.

In this case, the investors maximize the benefits, but the benefits of the occupants and tenants are reduced correspondingly to the facilities and facilities being reduced.

Mr. Le Hoang Chau – Chairman of the HCMC Real Estate Association still sees the legal loop of this market and recommendations: Currently, according to Vietnamese construction standards, design standards have not specified the standards of planning, design work courthouses, condotel, officetel, especially in the past time not including population indicators for these works when approving investment projects. Therefore, putting the project into operation has put more pressure on the urban technical infrastructure, especially contributing to the increase of traffic congestion.

You can read more information at Vietnam Real Estate Investment

Condotel and officetel

Mr. Chau recommends: Regarding the population criteria, the Association agrees with the proposal of the Department of Planning and Architecture to uniformly apply the population quintile equivalent to 50% of the population target of the housing project, without distinction project or condotel, officetel independent or in the same mixed housing.

The Association recommends not stipulating the equivalent population (100%) with the population norm of the housing project, if combined condotel, officetel combination apartment in mixed.

In this case, the company will apply for 100% of the apartment building, not to build a condotel mixed with condotel, officetel, to ensure investment efficiency.

The layout of the condotel, officetel should be arranged at the floor and the traffic is separate from the residential area.

Regarding the state management, the Association suggested that there should be effective management mechanism to avoid the condition of condotel, officetel, shophouse into apartment housing disrupt the general planning and increase the pressure on the system urban infrastructure.

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