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Apec Mandala Wyndham Hue project of Apec Group.

However, recently, according to many real estate experts, this market is showing signs of improving.

The percentage of successful transactions increased

Data from the Vietnam Association of Real Estate Brokers (VARs) shows that, in the first six months of 2019, the total supply of condotels nationwide reached 11,855 units, but the transaction volume was only 2,967 units. In particular, products marketed primarily from 2018 projects were still offered for sale.

Specifically, in Nha Trang recently, only 1,000 condotels were recorded, a significant decrease compared to previous years. In Da Nang, according to Savills Vietnam, the supply of condotel comes from 15 projects, of which there is only one new project (from the second half of 2018).

However, in the third quarter of 2019, new supply of condotels coming to market reached 3,680 units, transactions reached 2,515 products. Compared to the first and second quarters, the supply has decreased sharply by half, compared to the first quarter, but the transaction volume has increased sharply. Some strong growing condotel market can be mentioned such as Binh Thuan, Ninh Thuan, Quang Nam and Hai Phong.

In Binh Thuan, at the end of 2019, many projects were offering for sale such as the Summerland condotel apartment project and the Apec Mandala Wyndham Mui Ne project. In Ninh Thuan, the supply of condotels is coming to the market, with many big projects such as condotel Sunbay Ninh Thuan. There will also be some new projects launched in the fourth quarter.

In addition, the condotel market also recorded prosperity of some new markets such as Hai Duong with the project of Hoa Xa Tower including 16 floors; the price being offered by the investor from only VND 25 million/m2. Or in Hai Phong is the Condotel Cat Ba Project; Quang Ninh also has many condotel projects such as Quang Hanh Condotel Project Quang Ninh, Best Western Plus Ha Long Bay Hotel; Phuong Hoang villas and garden hotel area of ​​Thuan Phat Investment and Services Joint Stock Company with 108 units; hotel-resort complex in Dong Hung Thang 2 tourist residential area of ​​Tan Hoa Lu Investment Joint Stock Company with 215 units.

Particularly, some projects do not make a profit commitment when launching condotel products. For example, in Vung Tau, An Gia Group launched The Song project with a scale of 1,600 condotels; Nam Group introduces Thanh Long Bay Tourism Complex (Ham Thuan Nam) or Novaland with Novaworld Phan Thiet Complex.

Explaining the excitement of the condotel segment and sea apartments in new markets, Nguyen Van Dinh, Vice Chairman of Vietnam Real Estate Brokers Association, said the current real estate markets in Da Nang, Nha Trang and Phu Quoc were pushed too high, the price of coastal apartments to 50-80 million VND/m2, so the room for price increase no longer exists. Therefore, investors tend to flock to markets with great potential for tourism but low prices.

"The coastal resort apartments in new markets such as Binh Thuan and Ninh Thuan are only over 1 billion dong, with such prices in this segment, many investors can easily buy in. Besides, the strong development of both transport infrastructure and tourism infrastructure is also a stimulus for investors to actively seek to come here," Dinh emphasised.

Legal improvement

Explaining the quietness of the condotel market over the past time, many experts recognise that the main reason is that customers and investors are not really assured to invest due to policies and management as well as the operating of condotel business. This is because in recent years, in many projects, business exploitation capacity of investors is weak, leading to the doubts of customers about ability to ensure long-term investment efficiency. On the other hand, the bank's tightening of credit sources to invest in real estate, especially resort real estate, is also making it difficult for customers and investors to access loans to invest.

Dinh said, currently, there is no clear plan for condotel ownership, although, this is a valuable asset. Most condotel projects are built on commercial land, so they do not receive a permanent red book like an apartment for living. For example, the average price of a resort product is VND 40-50 million/m2, even projects with prices of more than VND 70 million/ m2. This price is equivalent to the price of luxury apartments in Hanoi and Ho Chi Minh City while the condotel has not been issued a red book, which makes the liquidity of the condotel very low, difficult to attract investors in the market.

According to Dinh, the Government has requested the Ministry of Construction to promulgate regulations to amend and supplement construction standards and standards for condominiums, condotels and officetels in 2019. With this move, the condotel market will soon have a specific legal framework, remove all obstacles of investors, making leverage for the exciting condotel investment market again.

At the third quarter press conference of the Ministry of Construction, Nguyen Trong Ninh, Director of the Housing and Real Estate Market Management Department said, in 2019, the ministry will issue a set of standards, standards, related to condotels. In addition, the Ministry of Natural Resources and Environment will provide guidance on land use regime with condotel constructions related to land use time associated with land ownership and apartment ownership. The Ministry of Culture, Sports and Tourism will also complete regulations on condotel management and operation.

On the potential of the condotel market, Vo Thi Khanh Trang, Head of Savills Research and Consulting, said that the quiet resort market in Nha Trang was not a step back but was even seen as a step forward for transparency and product quality.

"After a period of overheating, it is clear that the resort has revealed a number of regulatory and legal shortcomings. For the developer, this is a pause to look back and assess from there. Meanwhile, the buyer should pay attention to checking project legal information, reputation of the investor, the operator as well as the method of making a commitment to lease to minimise the risk when investing in the type. This real estate model," Trang said.