|Status of condotel ownership may require further direction - illustration photo |
From May 20, Decree No.10/2023/ND-CP, which amends and supplements a number of articles guiding the implementation of the Law on Land, will officially take effect, meaning tourist accommodation built on commercial and service land will be certified for ownership of land-attached construction works.
Decree 10 is considered a good sign for project developers and buyers of condotels, with some experts predicting that the move will remove long-standing problems in the issue of ownership certificates for condotels.
According to Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, the decree is the first step in solving legal bottlenecks for condotels. “This is the expectation of thousands of investors who have been participating in the resort and tourism real estate market,” Dinh said.
Policymakers and associations have organised many seminars and given recommendations to solve this problem, and now we have the first result. I think that in the coming period, tourism and resort projects will see more benefit for investors,” Dinh added.
Vu Hoang Hai, a condotel broker in Danang, added that Decree 10 will be the legal basis for the authorities to guide the procedures for granting so-called pink books for owners “and create a push for the market” to resume its recovery.
The legal corridor for condotels was also one of the issues that the foreign business community raised at the Vietnam Business Forum (VBF) held in March in Hanoi.
Tran Anh Duc, co-head of the Investment and Trade Working Group of the VBF, said that a consistent legal framework will also help attract foreign individuals to buy and own new properties such as condotels, tourist villas, resort villas, bungalows, officetels, and townhouses.
However, according to experts, there are many obstacles to letting condotel become treated like any other real estate product.
Nguyen Duy Thanh, general director of Global Home Management, said that it is necessary to have a more detailed legal framework with specific regulations on management, exploitation, and operation of both condotels and officetels.
“The condotel is closely related to three parties: the owner of the apartment, the investor, and the operation management unit,” Thanh said. “In the draft laws on real estate, land, and housing, it is necessary to clearly define these so that the legal regulations follow accordingly.”
Moreover, Thanh added, condotels which were already issued a pink book should be considered for an extension of land use rights after the first phase of 50 years if that tourist project is in good planning, for another maximum of 50 years.
Vo Hong Thang, deputy director of research and development at DKRA, said that the problem of resort real estate is not only the pink book.
“Decree 10 helps to partially solve the problems of resort real estate. However, to completely remove obstacles and promote recovery, it is necessary to have more synchronous solutions, both in terms of legality, credit capital, and the recovery of the tourism industry,” said Thang.
Specifically, he added that the government needs detailed guidance for Decree 10 to be effectively applied and implemented.
In addition, the process of granting pink books of this type needs to be more flexible.
“There should be specific regulations on business, operation management, and ownership terms for condotel types,” Thang explained. “Secondly, there should be a legal corridor to protect the interests of owners in the implementation and payment of commitments from developers.”
According to statistics from the Ho Chi Minh City Real Estate Association, by the end of 2022, there were more than 83,000 condotel apartments waiting to be issued with pink books. Most of them were built in resort projects in commercial and service land funds with a lifespan of 50-70 years.
In recent years, the condotel segment and businesses investing in this segment have faced many difficulties because of pandemic slowdown. In addition, investors have not yet received expected profit from condotel exploitation. The transfer of condotels is also not easy because of a lack of legal clarity.
A recent report from DKRA Group shows that in the first four months of this year, the country only recorded a few successful transactions of resort villas, and no condotel projects have opened up for sale.
The supply and transactions of condotel apartments segment dropped dramatically due to the general effect of the frozen real estate market, and the apartment type was no longer attractive due to legal risks, the report added.
“Therefore, being granted a pink book and allowing legal perfection for condotels will help investors ensure their interests, and can also make the market more transparent. Meanwhile, the liquidity of condotels would be increased to ease the financial burden for their investors,” it said.
Le Hoang Chau - Chairman Ho Chi Minh City Real Estate Association
Decree 10 only stipulates the issuance of pink books for condotels, while in fact there are many other types of buildings used for the purpose of accommodation that have been not mentioned.
In addition, over the past 10 years, thousands of condotels that were granted pink books by the local authorities have been withdrawn. However, this decree has not yet provided for the forward handling of re-issuance of books in these cases. Therefore, it is necessary to add this condotel to the decree to make it more consistent.
Doan Van Binh - Vice president Vietnam Real Estate Association
Types of tourism real estate such as condotels, tourist villas, townhouses, farmstays, or officetels have seen interest from many foreign investors, but the legal regulations have not been fully promulgated. Besides the current regulations that foreigners can buy houses in certain projects, it is necessary to allow foreigners to buy non-residential construction works such as apartments, villas, and tourist farms to increase the liquidity of the market.
Do Thi Thu Hang - Senior director of Research & Advisory, Savills Hanoi
The resort real estate market has been quiet for a long time and the lack of a legal framework is the biggest barrier to creating a recovery momentum for this segment. Therefore, Decree 10 will be the legal basis for competent authorities to guide procedures for granting certificates of ownership of works used for tourist accommodation and construction attached to commercial and service land use purposes.
This is also considered a premise for the market, including developers and investors, to understand that the legal orientation of the product is being pushed forward, thereby creating momentum for this segment in the national market.
| ||Taking the right approach to the condotel legislation conundrum |
The absence of legislation and clarity regarding condotel ownership has been a significant obstacle for property developers and the hospitality sector. In the last 7-10 years, there was a significant amount of investment in condotel products, mainly in resort areas alongside villas and hotels. These multi-segment developments have often been funded by the presale of villas and condotel units.
| ||Necessary steps for legal clarification of condotels |
There continues to be controversy concerning the need for adding a legal framework for condotels into the recent draft of the Law on Land in Vietnam, which is currently under consultation.
| ||Revised land law may not clear up condotel conditions |
Although a draft revised Law on Land proposed by the Ministry of Natural Resources and Environment will not include condotels in its remit, experts still suggest the issue needs to be addressed to ensure clarity on differences in terms of business and regular accommodation.
| ||Buyers of condotels, officetels to get ownership certificates |
Ownership certificates will be granted to buyers of condotels, officetels, resort villas and other properties which are built on commercial and services land and used for accommodation and tourism purposes.
| ||Condotels have not been forgotten |
Despite some unresolved issues, the licence to grant ownership rights for resort and condotel property investments has fulfilled investors' hopes after decades of waiting.