Condotel oversupply due to massive investment
While investors remain optimistic about condotels, seeing promising profits, experts are concerned about the rapid development of the real estate product.
Stephen Wyatt, General Director of JLL Vietnam, in an interview to the Vietnam Economic Times, said condotels have become an increasingly popular asset type. Many condotel projects have reportedly achieved positive sales rates of up to 70%-80% within just six months of launching.
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| Condotels have become an increasingly popular asset type |
Nguyen Tri Hieu, a renowned banking expert, said there are many latent risks in the market segment because of unclear legal mechanisms and the sharp increase in supply just after two years.
“The supply of condotels increased too sharply in 2016-2017, while the demand is not high enough,” Hieu said. “This will lead to a demand-supply imbalance and make it difficult for investors to sell products.”
Also, it is difficult to classify the product, so there is no legal framework for the trading of condotels.
Some investors have committed to give land use right certificates (red book) to condotel buyers on delivery. However, if buyers resell condotels, their sales contracts may not be notarized.Duong Thuy Dung from CBRE Vietnam said that besides the legal risks, the oversupply is worrying. Most condotels are bought by investors to lease. They rush to buy because of the profits, while ignoring legal risks.
