Investing Real Estate Resort: Do Not Just Look At … “Papers”

The warning of most real estate professionals for investors at this time, especially with condotel – segments attract the most money from “500 tons of gold” in the current population…

Statistics from the Alliance of real estate trading floor G5 show that in 2016 is considered to be the boom year of the real estate resort market with an impressive number of nearly 44 projects offered for sale, supplying more than 12.000 units Condotel and more than 5.000 villas to market. On average, almost every month there is tourism – vacation real estate project is sold.

This data shows the big expectations of investors in the condotel segment, a new segment participates market in the short time. Not only, the investment is not too large compared to other traditional resort segments such as villas, but also the attraction comes from the commitment to share rental profits for individual customers from 8-12% per year (much higher than savings in the bank or safer than stock investment) has exhorted demand for this type of apartment.

The word of warning is not left by most real estate professionals for investors at this time, especially with condotel

Not to mention, most of the current projects, customers only need to spend at least 25% of the apartment value is owned condotel apartment, the rest is loaned by banks with preferential interest rates. Calculating with mental capacity of 70-80%, the ability to recover initial investment from a project may not be too long, only from 8 to 10 years.

In particular, this expectation base on by recent assessments from research organizations. In the coming time, development of tourism growth, resulting in shortages of high-quality accommodation services, the opportunity to profit from the condotel projects is emergent. Not to mention, the potential for this segmentation will be even more apparent thanks to the visa exemption policy for travelers from nine countries including France, Germany, England, Spain, Italy, Australia, New Zealand, India and Canada, attract international visitors to Vietnam.

However, this number based on assumptions, it is to consider each project and not all projects can achieve the same attractive. According to Dr. Vu Dinh Anh, Economic experts, a counterpart fund flow of at least 50% of the product value, should be a pre-condition for investors to access bank credit in condotel market, as well as a practical resource to investors, pay credit obligations and realize profits.

In addition, it should note that the commission rate is not really the net income of the investor, but they also have to pay at least two things: the management fee and the personal income tax payment. Accordingly, the net income of the investor may fall sharply if the cost of management is too large. This is often to see in projects that developers have never experienced in the resort market.

Therefore, investors should consider carefully investing in resort projects, avoiding believing too many brothels of brokerage staff with condotel projects owned by the owners non-prestige investment deployed.

With good financial strength, many investors are also willing to commit to direct profit on the contract signed to increase the prestige with the customer.

In fact, condotel projects are advised by BRE, Savills, JLL to investors who are big developers, such as Vingroup, Eurowindow, VinaCapital, Sovico Holdings, Sungroup, CEO, Empire Group…

They have a strong potential, these investors can hire professional consulting units from abroad or directly operate and manage, the other hand the brand of these investors also promised to increase rental room capacity – an important factor that determines the viability of a real estate project.

In addition, they are good financial strength, many investors are also willing to commit to direct profits on contracts signed to increase the prestige with customers. For example, the case of Nhat Minh Tourism (Member of Sovico Holdings) also made a commitment, the minimum profit is 40% of the total contract value in the first 5 years, from the 6th year, owner enjoys 30% of revenue with Da Nang Ariyana Smart Condotel Project.

At the Coco Ocean – Spa Resort by the Empire Group as an investor pledges the minimum return customers earn 12% per annum on the value of the contract in the first eight years, from the 9th year onwards, the owner apartments are divided profit at the rate of 80% /20%, 80% of customers and 20% of investors…

Other investors may not share direct profits with the contract, but create different rental options with appropriate profit sharing or allow for self-exploitation and support to bring the highest profit.

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