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Danang Condotel Market: Deformation Development And Difficult Problems For Urban Management

Condotel Danang market

The condotel market in Danang in recent years has recorded remarkable growth, supply is constantly increasing, product types are also diverse. However, there are signs of instability, which has become a challenge for local authorities.

Develop a whirlwind

Due to the growth of tourist resources, the real estate projects in Da Nang have been launched in the past few years, offering a huge supply of diversified products.

 Currently, the city has 83 projects invested with over $7.3 billion, of which 20 foreign investment projects with total capital of $1.28 billion and 63 domestic projects with a total capital of $6.02 billion.

According to the Vietnam Association of Real Estate, from late 2016, Danang is leading the country in the development of condotel projects. The development of the condotel segment of Danang is like a “whirlwind”. According to Savills Da Nang, condotel supply in this coastal city could triple in 2018.

Condotel Danang market
Real estate development is built in Da Nang

Similar to Savills, CBRE Vietnam also believes that condotel supply in Da Nang is very plentiful. By the end of July 2017, the total number of condotel supplies in Da Nang was 6,715 units. It is estimated that by the end of the year there will be about 1,350 units on 5 new projects. A number of projects have been proposed by the owner to be expected to 2018 – 2019 with a forecast of new supply of about 9,000 units.

Many generals, no less risky

However, in this market, at present, there are signs of “deformation”. Mr. Rudolf Hever, International Advisory Director of Savills Group, Asia Pacific said, “Condotel brings a golden era to the real estate market, but after growth is uncertain.”

This decision is not unexpected, because, after a period of massive development, Da Nang’s planning has been charged with a series of projects are adjusted land use patterns, architectural design to switch from Commercial service to condotel, hotel room, or apartment to condotel.

Right in the heart of Danang City, the Golden Square Apartments and Apartment Complex has been upgraded from a 36-story condominium project to a condotel condominium project with 416 units.

F – the Home project of Da Nang Food Joint Stock Company at 16 Ly Thuong Kiet, Hai Chau District. F-Home has an area of 4.105 sqm, floor area 78.000 sqm, scale 27 floors and was developed into a residential area of 560 apartments.

The investor has converted the commercial housing project to the type of social housing, and F – Home has been listed by the Ministry of Construction to list 59 social housing projects for customers to borrow preferential package from $1.4 billion. However, in the past two years, this project is also being marketed with condotel products.

From the type of social housing, F – Home as “swan duck” because each apartment is trading from several thousand now has been offered over $45 thousand, equivalent to selling price of $860/ sqm. From an apartment building that is a social housing, the current owner does not hesitate to inform customers that this is a 5-star condotel project.

Projects such as F – Home appear on the condotel market Da Nang is not a little. Not to say, not only about the planning, the land in these projects are often planned as land for commercial services and for a period lease, so condotel projects are not formed units. It is not convenient to legalize the condotel because the law does not have a clear mechanism for this. The new real estate business law only regulates in case of the assignment of house purchase or sale contract, but no regulation on a transfer of construction contract is not the house in the picture into the future.

However, many investors are still boldly promoting and pledging to put people into condotel project living as a normal apartment building and also give the red book for buyers (?).

Condotel Danang market
Da Nang seaside, there are dozens of bulky Condotel buildings up

Hard work

Before this situation, Department of Construction Danang, before the new investment trend, if the city does not have appropriate management mechanism will be the risk of forming a large number of units in areas where technical and social infrastructure is not suitable composite.

Negative impact on the technical infrastructure and social infrastructure in coastal areas with high requirements on landscape architecture and orientation for development of services and tourism can be considered as not ensuring the landscape architecture, the management of urban planning, the pressure on technical and social infrastructure of neighboring areas, the lack of technical and social infrastructure (schools, hospitals, culture, etc.) for the residents of the project. In particular, the long run will break the planning of coastal urban space, great impact on tourism – the key economic sectors of the city.

According to the Department of Construction, to tighten the management work, the Department of Construction requires the project owners not to apply the provisions of the Housing Law and the Decrees guiding the Housing Law with respect to their projects. Construction Department also said that the current Danang Condotel is a hotel and does not form housing units, investors have to communicate so that customers understand the product you cannot buy in the long term, condotel is a product of tourism, the owner is not allowed to enter the housing, the project building is not allowed to set up the apartment management as ordinary apartment. The building also evaluates the condotel as the hotel, does not require the social infrastructure. As kindergarten, community living as other apartments, owners of condotel projects must own at least 30% of the number of apartments or hotel room ownership. At the same time, the investor committed to the sole purpose of the project is tourism services, not forming housing units. This commitment is specified in the investment certificate or investment policy approval. Customers should thoroughly understand before making a purchase to avoid further damage.

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