Condotels have been compared to the “black hole” phenomenon in the past few years for gravitating a lot of capital and attention from the real estate community as well as the common people. It is a mixed model combining condos and hotels creating many outstanding advantages. Thus, more and more real estate businesses have placed their focus in deploying and developing this unique design.
2017 ended with a turn of events when the market supply was completely dominated by 23,000 condotel units. Experts also forecasted in 2017 that around 27,000 to 29,000 condotel apartments would be released to the market over the next two years.
Most notably, in the projects that were on sale, 77.7% of all the condotel units had offer prices equal to other luxury real estate around 35-70 million VND per square metres.
From Khanh Hoa, Da Nang, Kien Giang to Quang Ninh province, this hybrid model has been driving the market.
Khanh Hoa, the province known as the capital of condotels, has witnessed impressive growth. According to Khanh Hoa Department of Construction’s statistics, Nha Trang city has more than 18,000 condotel units with 3,500 currently in operation, which accounts for over 50% of the country’s total supply.
Chairman of the Board cum General Director of Thien Minh Real Estate Investment Joint Stock Company, Mrs. Nguyen Vu Thien Diem shared, “The product is the combination of two functions, both as a home and a hotel, which is now a popular trend. International investors coming to Vietnam to work not only care about accommodation but also travelling. Investors have well adopted this mentality and built apartments that are suitable with actual demand of the market.”
“Of course, for this segment, the speed of sales really depends on the location of the project, its surrounding infrastructure and the size of the apartment. Condotel’s reasonable value is another major reason attracting investors, since they can stay at their own apartment in addition to profit from the lease. Moreover, management and rental will be carried out by the business owner instead of the investor having to find their own tenants.” Mrs Diem added.
Mr. Than Thanh Vu, Vice President cum General Secretary of Vietnam Real Estate Association, believed that customer’s demand is one of the driving factors for condotel’s hot growth in recent years. “Nowadays, every traveller wants all amenities to be around them. A fully furnished room, just like an apartment, can satisfy the need of a whole family. Moreover, condotel’s financial mechanism lifts the financial burden from the shoulders of many project developers. They are now able to generate income while finishing that or other projects. For that reason, condotel’s growth has been accelerated due to continuous investments.”
Mr. Vu estimates that with the growth rate of 45-50%, if there are 1000 condotels this year, the numbers will increase to 1500 in 2019. Thus, resort real estate’s growth rate will surpass that of tourism.
Many experts claim that condotel’s hot growth rate could cause typical market failures like adoption of continuous investment. Many businesses will try to invest despite the market soon being saturated, leading to many negative societal consequences, such as invasion and dispute over beaches.
Mr. Than Vu summed up the issue when he said, “Condotel’s business rush will soon form a concrete Great Wall crushing and dividing the beaches. All the views will eventually be blocked by concrete blocks. Widespread investments and high-rise buildings will lead to environmental pollution and inadequate infrastructure.”