Condotel: From “Sea” to “City”
The period from 2014 to 2019 was considered the “golden” era for the resort real estate segment in tourist cities like Nha Trang and Da Nang. Among these, condotels (hotel apartments) were considered the top choice in the real estate investment portfolio due to the advantage of owning an apartment or villa while earning rental income. However, this investment channel seems to be shifting towards inner-city areas.
One reason for this shift stems from the risk of “excess supply” of resorts in tourist cities as well as multiple market influences, resulting in unstable rental income for investment returns.
This explains the trend in investment flows shifting towards hotel apartments (apartments with a 50-year ownership with design and services to 5-star hotel standards) in the city centers of major cities like Hanoi and Ho Chi Minh City in recent years.
With the combined benefits of central location, international-standard amenities, the option to extend usage when the term expires, and high potential customer demand, the hotel apartment model in central locations in large cities is being recognized as a high-yield investment channel for investors, especially since the supply of this segment in the market is still quite limited.
According to the Q1/2024 market report by Batdongsan.com.vn, the average rental price for apartments in Hanoi in the first quarter of this year increased by 4% compared to the same period last year. Notably, the rental price for apartments in most districts of Hanoi such as Bac Tu Liem, Nam Tu Liem, Tay Ho, Cau Giay… increased by 7-8% compared to the same period.
While condotels in tourist areas are short-term destinations for tourists during vacations and travel, the hotel apartment model in the inner city targets long-term guests, particularly the foreign community living and working in Vietnam.
In line with the continuous growth of FDI inflows in recent years, this community is expanding rapidly. Hotel apartments with professional rental management will meet foreign residents’ stringent criteria for amenities and services. The growth of apartment-sharing platforms such as Airbnb and Booking.com… is a testament to the trend of owning and renting hotel apartments in recent years.
Double Benefits for Seizing the Opportunity
Speaking about investment opportunities in long-term owned inner-city hotel apartment projects, many experts believe this is an investment trend that many people are paying attention to due to the market’s significant potential.
In a real estate housing industry report, Mirae Asset Securities shared a similar view, stating that the housing market had overcome its most challenging period and was recovering gradually. Within this, urbanization and public investment are expected to positively catalyze the real estate industry’s long-term recovery.
Furthermore, the real estate market’s recovery stems from the public’s high demand for home ownership, driven by a young labor force and increasing urbanization.
The real estate market is gradually recovering.
One advantage of hotel apartments that investors should note is Decree 10/2023/ND-CP, which resolves the issue of granting pink books for condotels (hotel apartments) and officetels (hotel-conjoined office apartments).
This is seen as a step forward in resolving legal constraints for two typical types of real estate, condotels and officetels, which had been a major obstacle for real estate businesses, localities, and investors.
However, in a recent report, CBRE Vietnam noted that following a period of strong growth in supply from 2015 to 2019, there is now an ongoing supply shortage. Amidst Hanoi’s severe shortage of hotel apartment projects in central city locations, completed construction projects with clear legal status are bound to receive special attention from customers and investors. As such, savvy investors who capitalize on this opportunity stand to reap even greater returns.
