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|Condotel demand is exploding even without a dedicated legal framework in place_Photo: Le Toan|
Condotels – which offer short-term rentals and hotel-level services together with the independence of a condominium – are driving much of the recent interest in the second-home segment.
In documentation sent to competent bodies, representatives from the Vietnam Real Estate Association and the Ho Chi Minh City Real Estate Association (HoREA) have petitioned for the creation of condotel-specific ownership certificates. The situation has been at a standstill for more than one year.
HoREA chairman Le Hoang Chau said that this type of product has not been illegally built, yet its legal framework has not been established.
“Developers are permitted to do things which are not included in a ban, and market demand is how this property type was born,” Chau said.
“When it appears, competent bodies must consider it as an official type of property and must create a legal framework for it, to ensure the rights of both developers and buyers in these projects.”
Doan Van Binh, chairman of CEO Group, a developer of thousands of condotels throughout the country, said that buyers have faced difficulties in asking for their ownership certificates since the legal framework has not yet been developed.
“In order to protect the rights of buyers and developers, detailed guidelines for the issuance of red books need to be created very soon,” Binh said.
Lawyer Bui Dinh Ung from the Hanoi Lawyers Association said that condotels should have their own ownership certificates; however, in order to do this, the National Assembly must revise related laws – such as the laws on Land, Housing, and Real Estate Business – to create a framework for condotels.
One legal problem is that many condotels were built on land which was given to developers to build commercial properties and services, and not for residential purposes. This type has so far not been certified with a red book.
According to Nguyen Hoat, head of the Khanh Hoa Department of Housing and Real Estate Management, in order to sell their condotels in the fastest way, many developers have hidden the fact that their condotels have not been certified as a residential unit.
“This is unfair to buyers and a deception on the part of developers. Buyers have the right to know what their units are in reality,” Hoat said.
Condotels have been present in Vietnam for less than two years, but their supply has seen a sharp increase due to the adaptation of the market. Their developers are increasingly committing to guarantees of good rental yields, often from 8-10 per cent.
According to property consultant DKRA, more than 7,000 condotel units are now on the market. Those condotels are mostly centred in Ho Chi Minh City and coastal cities such as Khanh Hoa, Danang, Binh Dinh, and Phu Quoc. This number is expected to double by 2019.
In Danang and Nha Trang, dozens of condotel projects are under construction. In Nha Trang, according to the Khanh Hoa Department of Construction, more than 20 condotel projects – holding a total of more than 10,000 units – are currently in the pipeline. Around one-tenth of these have already been put into operation.
Figures from HoREA, dating from the beginning of this year, peg the total condotel supply at 16,000 units. Between 2017 and 2019, there will be an additional 27,000 to 29,000 units launched annually to the market.