Condotel Market Report for Q2 2024 by DKRA Vietnam
The Q2 2024 report from DKRA Vietnam reveals a 51% year-on-year increase in primary condotel supply, with the majority coming from old project inventories (over 66%). Notably, new supply witnessed a significant growth spurt, increasing more than 25 times compared to the same period last year, but this was concentrated solely in a single project in Khanh Hoa.
Consequently, consumption also surged compared to the previous year (a 6.8-fold increase); however, transactions were confined to the aforementioned project in Khanh Hoa. Old projects generally experienced sluggish sales or no recorded transactions. The trading activity was concentrated in large-scale projects with selling prices below VND 3 billion per unit.
Primary price levels remained unchanged from 2023, staying high due to elevated input costs. Nonetheless, payment support policies, such as extended payment schedules, grace periods for principal payments, and interest rate subsidies, continue to be widely implemented to stimulate market demand.
According to DKRA, despite the market’s growth in the last quarter, this expansion was localized to specific areas and not representative of the overall market. Legal issues, operational efficiency, and investor confidence remain obstacles that hinder the market’s short-term recovery.
In Q1 2024, the condotel market witnessed the lowest demand in five years, with consumption equivalent to just 35% of the previous year’s level. Most projects experienced slow sales, and 90% of them recorded no transactions during the quarter.
Numerous projects faced legal issues and had to halt sales, resulting in a buildup of high-value inventory. Additionally, they competed directly with discounted products from investors, leading to lower-than-expected consumption.
Looking ahead, DKRA forecasts a significant decline in condotel supply in the next quarter, ranging between 400 and 500 units, mainly concentrated in Danang, Khanh Hoa, and Quang Ninh. Overall market demand is expected to remain subdued, with the downward trend likely to persist through 2024. Primary price levels are anticipated to stabilize, with no significant short-term fluctuations.
Real estate businesses facing multiple challenges
The Ministry of Construction acknowledges that the real estate market has shown positive developments, overcoming its toughest period. However, the real estate market and businesses still face numerous challenges.
70% of the challenges in the real estate market arise from legal complications
According to HoREA, the biggest obstacle, accounting for 70% of the difficulties faced by real estate and housing project investors, is the “legal hurdles”.
Unleashing the Potential of Condotels: Navigating a Smooth Path Forward
The People’s Committee of Khanh Hoa Province has introduced a streamlined process for issuing property ownership certificates (pink book) for vacation real estate (officetel, condotel) on commercial service land. The responsibility for implementing this initiative lies with the Department of Natural Resources and Environment.
The Ultimate Guide to Condotel Investment Strategies
Many investors with limited capital had to borrow billions to invest in condotels, and now they are struggling to keep up with bank interest payments. While rental prospects are bleak, selling at a loss is not an option as there are no buyers.
