On August 16, the conference "Property ownership trend: International experience and Vietnam practice" hosted by the News Center VTV24, Vietnam Real Estate Association (VNREA) and BizLIVE Investment Forum, has pointed out an inevitable trend of the domestic real estate market. Experts at the conferrence said as freehold property supply is still limited, people are paying more attention to leasehold properties.
Ms Duong Thuy Dung, Senior Director of CBRE Vietnam, explained that new housing products are gradually replacing freehold property. Vietnam homebuyers have always preferred freehold properties, leading to high demand and consumption. However, in the first half of 2019, the number of projects offered for sale decreased significantly compared to the same period in 2018, leaving investors and homebuyers with fewer choices. As a result, the market attention turned to the leasehold properties such as condotel (hotel + apartment), officetel (office + apartment), villa, etc.
Nha Trang (Khanh Hoa), where many condotel projects were developed. (Photo: NLD)
According to CBRE Vietnam, many complex projects which consist of townhouses, commercial houses, or condotels, in Phu Quoc and Nha Trang are under construction. These units only come with 50-year ownership, therefore, people buy them mostly for rental purpose. In the past 4 years (2015 – 2019), tourism cities such as Da Nang, Nha Trang, or Phu Quoc, witnessed 100% of market growth of condotel segment, which was double the number of the previous period. Projects with a prime location were on high demand at that time. Now, investors have accepted the “50-year ownership” situation until clearer regulations related to the term are applied.
Dung said more than 70 of the 220 countries in the world sell apartments for a definite time, none of which are permanently owned.
However, according to Mr Nguyen Hoang, Director of DKRA Vietnam Research and Development, the downside of leasehold properties is the “fictional commitments” of developers. In 2018, some condotel projects failed to achieve a profit commitment when putting into operation. Rather than expected income, buyers have to pay more attention to the capacity of the developers and operators, in addition to legal framework issues.
Discussed at the conference, Mr. Tran Minh Hoang, Deputy Secretary General of Ho Chi Minh City Real Estate Brokerage Association, raised the issue. “We all know the 50-year limitation of condotel ownership yet we have not make it clear wherether it is 50-year ownership certificate or 50-year term contract with the developer.
Currently, each locality has different uses regarding to condotel and this has a great impact on the market. I suggest that the government grants 50-year Certificate of Ownership to condotel buyers to protect people's property rights.”
