Condotels to flare up with legal fine-tuning
With the tourism real estate market almost frozen after the collapse of luxury resort project Cocobay and the harsh impact of COVID-19, good news has come recently in the form of a new document issued by the Ministry of Natural Resources and Environment meant to guide the land use regime and ownership certification of non-residential construction works.
Condotels will be tourism businesses or villas, with different rights
Several tourism property projects have been built in the central region’s Danang city and Quang Nam province in recent years, such as Cocobay, Soleil Anh Duong luxury apartments, and Vinpearl condotel complexes. Most recently, Aria Non Nuoc, Malibu Hoi An, and Shantira Hoi An have started operations. Due to a lacklustre market situation since mid-2019, the real estate market in the region has levelled off and went down with almost no transactions.
One of the reasons for this downshift relates to legal obstacles associated with condotels, alongside the consequences from Cocobay’s failure to fulfil its profit commitment for customers, leading to investors losing much confidence in resort real estate products.
The condotel concept might be deleted by the local authorities, said Nguyen Manh Khoi, deputy director of the Housing and Real Estate Market Management Agency under the Ministry of Construction at the end of last December at the Gala reviewing the past year of the Vietnam Association of Real Estate Brokers in Central Vietnam. Accordingly, the local authorities would rename these real estate products for tourism businesses as tourist apartments or tourist villas, depending on the standards and characteristics of each.
Most recently, the Ministry of Natural Resources and Environment (MoNRE) has also issued documents guiding the land use regime and the certification of non-residential construction works to its local departments.
The guidance also refers to the issuance of certificates of ownership for construction works, particularly eligible tourist apartment and villa projects. This has become a good signal, not only for investors but also real estate businesses, rekindling the hope of reviving this market in the two localities of Danang and Quang Nam.
Le Huy Khang, CEO of Royal Hoi An Group – the investor of the Shantira Hoi An project – said there are still many legal problems from the past to be solved until the guidelines of the MoNRE are put into effect. Along with this, tourism real estate products will be specifically identified, ownership certificates granted, making the customers more assured, and businesses will also be able to sell or to mortgage such projects at more beneficial terms at banks.
“Currently, we are looking forward to the documents guiding the certification procedures on tourism real estate products from the local authorities. If they are done early, businesses will benefit greatly,” Khang said.
Le Dung, business director of Ariyana JSC – the investor of he Ariyana Beach Resort and Suites Danang project – assumed that the legal framework is what makes the product more transparent and creates peace of mind for investors.
According to Dung, two factors affecting the profits of tourism real estate products include investors’ ability to gain the expected profitability and how to use and manage investors’ cash flow.
Nguyen Bao Huy, general director of Babylon Real Estate Trading and Service JSC, said that the MoNRE’s guiding documents would partly make tourism real estate products more transparent and legitimate, yet policies in the guiding documents could not determine market movements.
Through perusing policies in the MoNRE’s recent documents, Le Ngoc Doan, director of R&B Consulting Co., Ltd. confirmed that not all condotels will be granted certificates of ownership for tourist apartments and tourist villas, only projects that have been approved by the local authorities as such from the beginning. “In the case of projects that are only approved by the state agency to build hotels and resorts for tourism business, investors who sell them in the form of tourist apartments will not be granted such a certificate, only business ownership certificates. Therefore, the customers must find out if the project is approved as a tourist villa or tourist apartment,” he said.
“Tourism apartments are only tourist accommodation establishments, so the certification will not mean that individuals who are granted a certificate will have household registration for the tourist apartments or tourist villa. It is just a certificate of ownership for the property,” Doan added.