The risk of condotel bubble in Vietnam is present

Mr.Nguyen Hoang Ha, Head of the General Department of Development Strategy, Ministry of Planning and Investment, said that even in developed countries, condotel bubble bursts are occurring. Vietnam, this risk is always present.

Mr. Nguyen Hoang Ha said that from the experience of developing condotel of the world, can clearly see the potential risks in investment of this type of apartment was foretold.

According to Mr. Ha, condotel apartment model appeared in the 1980s in Miami (USA). In the early time, this model has brought great effect when operating in the method of converting old hotels to improve the efficiency of investment and business, while meeting the demand for relaxation here.

However, by 1986, the efficiency of the condotel model had fallen sharply due to high taxation in the United States. Many investors consider the condotel a safe place to invest failed.

Shortly thereafter, the condotel was diverted to Australia and only after a short time, from 1987 to 1989, the condotel had really exploded in the country leading to the bursting of the real estate bubble in Australia in 1990, caused a pretty bad economic crisis.

The risk of condotel bubble in Vietnam is present

By the year 1990, condotel was once again revived in Miami, but as the US economy fell into recession in 2007, the property did not have the expected growth.

In Southeast Asia, Indonesia in 2015 also occurred a case investor of the client’s condotel project and then hug money to escape fears public opinion.

Explaining the potential risk of the condotel, Mr. Ha said that the most important issue for condotel is the legal uncertainty. This type of apartment is not yet legally recognized, not issued a red book to determine the ownership of the home buyer.

“Notably, the management of the hotel apartment from the side of the investor also implies many instabilities, most likely not as true as what the owner committed to the customer.

In particular, the high annual management fee, the profit depends on the traveler, not the apartment value. On the other hand, there is an excess of apartments, the supply side is more demand side, while demand for renting rooms of tourists is not as high as expected, “said Ha.

“The legal framework of the condotel is a big gap,” he said. “The problem is that the pledged profits are inflated, which puts customers at risk as well as the condotel bubble. Developed countries have this situation, while the management of Vietnam is poorer than them, so the risk is always present.

On the same point, economic expert Vu Tu Thanh said that the shortcomings that the condotel model applied in Vietnam is very clear. In fact, customers are not guaranteed benefits.

“The legal system in Vietnam is unclear, the ownership is not clear so investors need to be more transparent in the information, can not do snatch as today,” Thanh emphasized.

In addition, Mr. Thanh also said that the problem of condotel is not only in the profession but also the participation of many industries, many experts on the same.

More about this issue, lawyer Mac Dinh Thi, Hanoi Bar Association, commented that besides legal risks, condotel is also very entangled in the purchase contract signed between home buyers and investors.

According to lawyer Thi, if the apartment purchase contract has very clear grounds for the provisions of the Housing Law, the Law on Real Estate Business, the contract of sale of condotel can only be based on Civil Law on the basis of the agreement of both investors and customers.

“Meanwhile, the contract is usually prepared by the investor, of course in which there will be many terms the investor imposed on the client and the direction of profit on his side. It will definitely belong to the customer, “the lawyer warned.

According to Lawyer Thi, if the transfer, sale and purchase of apartments are done very easily between secondary investors, the condotel has no legal basis to do this, between Buyers and sellers must face many difficulties.

According to the Association of Real Estate TP. Ho Chi Minh City (HoREA) apartment market over the past years has had a very strong growth.

According to the statistics of 16 provinces and centrally-run cities, only large-scale resorts (50 ha or more) have 77 projects with a total area of ​​18,019 ha. 16,537 hotel rooms, 12,056 condotel apartments, 11,174 resort villas. In addition, there are more than 120 small and medium scale resort projects with an area of ​​less than 50 hectares per site.

From 2015 to September 2017, the country has 71 condotel, officetel licensed projects with a total of 25,639. Of these, 15,010 condotel apartments (Hanoi: 4,114 units, Ho Chi Minh City: 208 units, Da Nang: 4,565 units and other 5,823 units), 10,629 units (3,726 units in Hanoi) Ho Chi Minh City: 6,424 and other provinces: 479 units.

HoREA forecasts that in 2018-2019, there will be about 20,000 condotel apartments on average, with an area of approximately 45sqm.

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