Condotel sales at lowest level in six years

Hanoi – Vietnam’s condotel market is facing liquidity issues, with sales hitting the lowest level in six years in the first quarter of 2024.

Around 90 per cent of condotel projects in the country saw no sales during the period, according to a report by property consultancy DKRA Group.

Out of the 4,800 condotel units available for sale nationwide, only 64 units were sold in the period, representing just 1.3 per cent of the total.

In popular tourism destinations such as Da Nang, condotel sales have plummeted to a 10-year low, it said.

Developers are trying to boost demand by offering various support policies, but they are still struggling to attract buyers.

One of the main reasons for the lack of sales is the high prices of condotels, which remain around 150 million VND (6,000 USD) per square metre.

Developers are hesitant to lower prices due to heavy investments in high-end projects targeting affluent customers, experts said.

They also predicted it could take five to seven years for the condotel market to recover fully, as slow economic growth and limited tourism revenue continue to impact the sector.

They said residential properties which meet essential needs will bounce back sooner than resort properties such as condotels.

A lack of a legal framework for condotels, along with developers failing to fulfill profit commitments to investors, has contributed to low confidence and demand among buyers.

To rebuild trust, experts recommended establishing specific regulations for condotel standards and ensure developers keep their profit commitments.

While a decree was issued last year allowing ownership titles for condotel buyers, further guidelines are needed to facilitate the market’s recovery, experts noted.

Currently, there are over 240 tourism property projects with more than 114,000 condotels valued at 297 trillion VND (11.8 billion USD) nationwide, according to the Vietnam Real Estate Association.

These properties are mainly situated in key tourism markets such as Ho Chi Minh City, Hanoi, Da Nang, Binh Dinh, Khanh Hoa, Binh Thuan, and Ba Ria-Vung Tau.

Three months after a decree was issued to regulate land and housing rights certificates for condotels, additional guidance for relevant departments is still not forthcoming.

Although the conversion of some condotels to apartments has been approved in Vietnam, worries have been outlined over population density knock-on effects which may create pressure on urban infrastructure.