Condotel for sale at deep losses
In Quang Ninh, a number of villas located in Ha Long Street, Bai Chay Ward, are being advertised for sale at a loss of 3 to 8 billion VND per unit compared to the hot market period.
According to brokers, during the booming market phase, villas on Ha Long Street were transacted at prices ranging from 29-32 billion VND per unit. However, the current prices are only fluctuating from 21-23 billion VND per unit.
A similar situation is occurring with some villas on Ben Doan Street (Hong Gai Ward), which are being advertised for sale at 23 billion VND (reduced by 7-8 billion VND from the hot period), but still attracting buyers.
Not only vacation villas, but many condotel units in Quang Ninh are also being advertised for sale at losses of 300-700 million VND per unit.
Many condotels are being advertised for sale at deep losses. (Screenshot)
For example, the FLC Ha Long View Golf condotel, with a 46m2 wide bay view, is being advertised for sale at a loss of 750 million VND.
A survey at the end of 2023 by PropertyGuru also observed the ongoing loss-cutting trend for both vacation villas and condotels, although not as widespread as during the pandemic.
Mauro Gasparotti, Director of Savills Hotels, acknowledges the stagnation of the resort real estate segment. However, he believes that the problem lies not only in the excessive development in some destinations, but also in the lack of products that meet market requirements.
According to the Director of Savills Hotels, the growth of tourism, especially international demand before the pandemic, has boosted the overall development of resort real estate and hotels. However, some investors hastily entered the market without thorough research and planning, resulting in a supply-demand imbalance in some destinations. Furthermore, we have also observed a focus on quantity rather than quality in certain projects.
“The lack of consideration for market characteristics and trends poses many risks as projects are developed without meeting the experiential needs of tourists, especially now that Vietnamese tourists can conveniently travel abroad”, analyzed Mauro Gasparotti.
Investors await the legal constraints on condotels to be lifted
Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, believes that some provisions of the 2013 Land Law have not been clearly defined in recent years, making it difficult for localities to apply them to support businesses in granting ownership certificates to investors participating in resort real estate development. Although some localities have committed to granting land use rights certificates, many places deviate from the regulations, leading to prolonged paralysis.
Decree 10, which was conceived to directly release legal constraints for resort real estate, has been entangled nationwide for many years. Despite the strong support from the Government and local authorities, the unity between the Law and the Decree still encounters obstacles. Moreover, no localities have been able to implement it due to the absence of guidance documents. This issue needs to be resolved by amending the Land Law so that localities can enforce it effectively.
“The bottleneck prevents investors from participating in this market due to high risks”, said Nguyen Van Dinh.
The resort real estate market is still relatively stagnant
On the other hand, the economic downturn has led to a significant decline in tourist demand, and the policies for this sector are not particularly attractive. For instance, the visa policy for international tourists entering Vietnam remains restrictive.
In addition, domestic travel costs are still high, and airfares are much higher than tour prices. This leads to a weak economic efficiency in tourism and further discourages investors from participating. As a result, the business efficiency of resort real estate in 2023 has decreased.
To enhance the attractiveness of resort real estate products, Mauro Gasparotti believes it is necessary to create experiences for customers.
Currently, the market mainly focuses on scale, with projects having high construction density and excessive concentration on sales products.
Many developers strive to develop “luxury” and “wellness” products, but they lack a proper understanding of these concepts and fail to consider the surrounding synergistic factors. In recent years, a clear example can be seen in the formation of large-scale mixed-use projects dominated by shophouses or large-scale resort condominium projects where the supporting facilities and infrastructure are not well-invested or proportionate.
“A large number of products will cause difficulties in operation and rental business unless the project is carefully planned”, emphasizes Mauro Gasparotti.
