Logo of Phnom Penh Post newspaper Phnom Penh Post - Condotel prices fall in Vietnam amid failed profit commitments

Condotel prices fall in Vietnam amid failed profit commitments

Content image - Phnom Penh Post
Prices of condotels across Vietnam have dropped by eight per cent this year compared to last year. BATDONGSAN.COM.VN/VIET NAM NEWS

Condotel prices fall in Vietnam amid failed profit commitments

Prices of condotels across Vietnam have dropped by eight per cent this year compared to last year following disruptions in the profit commitments made to buyers, real estate portal Batdongsan.com.vn has said.

The website has released an overview of the real estate market this year, noting the “gloomy” signs in the condotel segment next year.

“The year 2020 will be a tough one for the condotel segment as investors are losing confidence after the recent failure by a developer to commit to paying a huge yearly profit of 12 per cent to its customers,” it said.

The average price of condotels nationwide dropped from 40 million dong ($1,700) per square metre last year to only 35 million dong in the fourth quarter of this year, a fall of eight per cent year-on-year.

The potential of the condotel segment is considered less attractive than other products such as condos, villas, townhouses and land plots in the coming year, the website said.

The term condotel refers to a combined condominium and hotel building that is owned like a condo but operates like a hotel.

Huynh Phuoc Nghia, deputy head of the International Business and Marketing Department at Ho Chi Minh City University of Economics, said a number of disruptions of condotel profit commitments had occurred in the market, forcing investors to be more careful.

The segment is riskier than others due to limited ownership, limited capacity of developers in operation and management, and especially a lack of legal framework for the sector. In addition, loopholes have been discovered in the commitments on profits, Nghia said.

In the 2016-2017 period and the first half of last year, profit commitments of 10-12 per cent a year, or even 15 per cent per year, were being offered to buyers.

The Ho Chi Minh City Real Estate Association (HoREA) has repeatedly asked the Ministry of Construction to address the potential risks of the condotel market.

Recently, the developer of the condotel complex Cocobay Danang announced that buyers would no longer be paid the annual returns it had promised because it was facing financial difficulties.

When it sold the units in 2016, the company committed to pay at least 12 per cent of the cost of units for eight consecutive years, a rate considered too high at the time.

Cocobay is a 51ha complex in Danang city’s Ngu Hanh Son district. Construction began in 2016 at a cost of around $5 billion.

In the first half of this year, more than 11,850 condotel units came on the market, mostly in the coastal markets of Nha Trang, Danang, Phu Quoc and Quang Binh.

But only 25 per cent of them have been bought, according to the Vietnam Association of Realtors.

HoREA chairman Le Hoang Chau said a guaranteed return is a major factor that attracts condotel buyers.

But a guaranteed return is a sophisticated marketing “trick” since there is no solid legal basis to protect consumers when there is a violation.

A legal framework covering condotel properties is urgently needed to protect the rights of both developers and buyers and to ensure the sustainable development of the property segment, HoREA said.



  • Hungarian exposes 90 to Covid in Siem Reap

    The Ministry of Health has discovered 90 people who have been exposed directly or indirectly to a Hungarian man infected with Covid-19. They all are required to quarantine at home and the hospital. The ministry is searching for other affected people. Among the 90, one is the

  • PM: West unfair to Cambodia

    Prime Minister Hun Sen released a message celebrating the International Day of Peace on Monday, saying that some major powers and western countries had been systemically cooperating to put political pressure on Cambodia as they did in the 1970s and 1980s. Hun Sen said pressuring

  • PM warns of ‘new Cold War’

    Prime Minister Hun Sen said the possibility of a so-called new Cold War has become a significant concern and that all countries have to reject outright, any attempt to allow history to tragically repeat itself. He made the remarks in a speech during 75th Session

  • ‘Bad news is an investor’s best friend’ – unlocking investment potential in Cambodia

    It is time to shop. Economic woes provide good pickings for investors if they know where to look The poem If, written by English Nobel laureate poet and novelist Rudyard Kipling for his son circa 1895, is widely perceived as fatherly advice for John who would

  • PM requests Russia’s Covid vaccine

    Prime Minister Hun Sen has requested that Russia provide Cambodia with its Covid-19 vaccine after the former announced it planned on mass vaccinating its population next month. The request came on Thursday through the prime minister’s Facebook page as he met with Anatoly Borovik,

  • First ‘mobile kitchen’ in Cambodia enters service

    A catering company recently rolled out Cambodia’s first “mobile kitchen” – a $50,000 container capable of serving up to 200 people at a time. The kitchen is the brainchild of Seng Hok Heng Catering Services. At 4.4m-high, 6.8m-long and 2.4m-wide (expandable to 6.8m), the kitchen is equipped