Stop building condotels, says real estate association

By Nguyen Ha, Dat Nguyen   October 18, 2018 | 12:13 am PT
Stop building condotels, says real estate association
A large number of condotel projects are located in Nha Trang coastal city in the central Khanh Hoa province. Photo by Shutterstock/Nguyen Phuc Thanh
No more condotels should be built in Vietnam and the focus should instead be on developing existing ones, says Vietnam Realtor.

In a report on the market in the third quarter, the association of real estate agents said the supply of condotels exceeds demand, echoing previous warnings of oversupply by many experts and market research firms.

Data from real estate consultants DKRA Vietnam shows high oversupply of condotels in the second quarter, with 2,100 new units coming online, but only 850 sold.

Unsold condotel units accounted for 74 percent in Khanh Hoa province, 78 percent in Binh Dinh province, and 91 percent in Da Nang City. DKRA said that the condotel oversupply situation might worsen in the future as more projects of over 1,000 units each year are being built.

Some 23,000 condotel units were built in the country last year, according to the Ho Chi Minh City Real Estate Association (HoREA). Last year only 33 percent of condotels were sold, just half the rate reported in 2016, it said.

HoREA in August last year estimated that between 2017 and 2019 around 29,000 condotels would be built.

But buyers are keeping away, one of the reasons being the lack of laws governing condotels, Vietnam Realtor said.

There have been disputes between buyers and management companies over ownership and maintenance of condotels.

Industry insiders said since authorities do not issue title deeds for condotels, many people are wary of buying them.

“Management companies and buyers are waiting for a law so that their rights can be guaranteed when investing in this type of property,” Nguyen Manh Ha, deputy chairman of the Vietnam National Real Estate Association, told a forum last August.

Vietnam Realtor said high prices are another reason for the anemic sales. Condotels are now sold at VND35-50 million ($1,493-2,133) per square meter, even VND70 million ($2,987) in some places.

This price range makes it difficult for buyers to resell later, the report added.

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