|A hotel room at Cocobay Da Nang, Ngu Hanh Son District, Da Nang City. Photo courtesy of Cocobay Da Nang.
Da Nang City Chairman Huynh Duc Tho had signed the approval on February 1, the municipal construction department said in press release on November 29.
However, the developer needed to consult the Ministry of Construction before execute the changes, and negotiate these with buyers to obtain the approval, the February document said.
The release also cited the approval papers as saying all conflicts between the developer and buyers should be resolved under the signed contracts or at court.
It was not clear at the time of writing whether the buyers were aware of the approval or if the conversion had been discussed with them by the developer.
Dozens of buyers had converged on November 28 at the headquarters of project developer Empire Group in Tay Ho District, Hanoi, with banners, demanding the returns promised them.
Their agitation followed an announcement made to 1,700 buyers earlier in the week by the group’s chairman, Nguyen Duc Thanh, that due to financial difficulties, the group won’t be able to honor its commitment to pay annual returns of 12 percent on investments for eight years, leaving many burdened with large bank debts.
A major investor in the project, Mai Huyen Tan, CEO of Hanoi investment consultancy ViDe Bridge, who had invested VND600 billion ($25.9 million), said that he could go bankrupt if Empire Group does not pay promised returns.
Meanwhile, Thanh has proposed a few outs for buyers, including them paying an extra 15 percent of their investment to turn the condotel into an apartment, or get a refund.
Cocobay is a 51-hectare hospitality and entertainment complex in Ngu Hanh Son District, Da Nang City. Construction began in 2016 at a budgeted cost of around $5 billion. The Empire Group had planned to build 10,000 three- to five-star rooms, but has so far built just 3,000.
It has been reporting losses since 2017, accumulating VND134 billion ($5.78 million) as of last year. It has debt obligations of VND10.17 trillion ($438.3 million).
Condotels became popular in Vietnam in 2016-2017, but until now there no official document has provided guidance on dealing with this kind of property.
Ownership of a condotel unit is merely an agreement between a buyer and the developer, and the buyer does not have a pink book, which is the title deed to apartments and houses. This means buyers have no legal protection during conflicts with developers.
In the third quarter of this year, 3,680 condotel units came online, 46 percent lower than the first quarter, according to the Vietnam Association of Realtors.