Condotel owners still cut massive losses to change investment direction

Difficult to "get rid of goods" even though prices have been deeply discounted

Once a very “hot” segment in the real estate market, owning Condotel – hotel apartments became a trend in the period of 2016-2018 with a series of products launched on the market. Especially in famous tourist cities of Vietnam such as Ha Long (Quang Ninh), Da Nang, Nha Trang (Khanh Hoa), Phu Quoc (Kien Giang), ... Condotel products are also sought after by investors thanks to the promises of profit from the investor.

However, with the supply continuously increasing for many years, this segment soon became "diluted" in the market and started to appear in the situation of cutting losses. Especially during the COVID-19 pandemic, with the "freezing" of the tourism industry, this type of investment has revealed more weaknesses in the investment market such as the ability to generate profits, profit commitments, and the operating capacity of investors are not as expected.

Since then, Condotel has been one of the types with a lot of information about cutting losses, coming from investors under financial pressure and partly no longer wanting to hold these products, due to the ability to exploit them not being as expected.

Many hotel apartments are still being advertised at a loss on online real estate markets.

Sharing about this “burden”, Mr. Nguyen Quang Khai (Hanoi) – who owns 3 Condotels in Quang Nam, said that Condotel used to be a very potential type when the investment capital was not much, it could be self-exploited for rent or handed over to the investor for exploitation. At the same time, the family was also given a vacation every year at the apartment they owned.

“The exploitation was not as expected, there were even months when we had to pay extra money due to negative cash flow. Because I wanted to get back some capital to invest in other channels, I also advertised for sale at a loss but there were no buyers,” Mr. Khai shared.

According to this investor, this is the situation that many of his friends and relatives are facing when owning Condotel apartments. In addition to difficulties in exploitation, this type of property still has many legal problems that have not been completely resolved. Therefore, customer confidence in Condotel is still low, making the story of cutting losses a difficult problem.

Many investors have been "attached" to hotel apartments for many years due to cutting losses and no buyers.

It is worth mentioning that many Condotel investors are also in a confrontation with the investor, when the profit commitments during the resale phase are not implemented, as happened to Ms. Thanh Huyen (Hanoi), the owner of a Condotel apartment in Da Nang. She had committed to sharing profits with an interest rate of up to 12% and lasting for 8 years, but after a while, this investor did not fulfill the commitment due to financial difficulties.

“In addition to my case, many friends who invested in Condotels in Ha Long and Nha Trang also encountered similar situations. After making a commitment for customers to pay, there were other reasons related to finance and operations to negotiate to reduce the committed profits or stop paying,” said Ms. Huyen.

Condotel market still has no bright spot

With the problems pointed out by investors, the Condotel market seems to still be struggling to recover at its peak. DKRA's July 2024 market report also shows that this type of Condotel without a market is still facing many difficulties. Even new supply and consumption were not recorded in the month,

In addition, many Condotel projects are still facing unresolved legal issues, and many investors have had to postpone sales, causing market supply to be very limited. Overall market demand is low, with primary consumption focusing mainly on products with a total value of less than VND3 billion/unit. Meanwhile, primary selling prices have not fluctuated much compared to last month. Incentive policies, interest rate support, quick payment discounts, etc. are still widely applied.

New supply and demand of Condotels hit “bottom” in July 2024

Commenting on the problems of this type, Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific, said that not only in Vietnam has the Condotel product encountered problems, some projects in Bali (Indonesia) also faced the same situation because of not being developed carefully. However, this market has now passed the stage of "new project explosion", instead it is developing more slowly and with better quality.

The Director of Savills Hotels also commented that the general market demand has almost recovered, however, the resort market still faces many challenges - from the oversupply in some places when many large-scale projects are put into operation, to the shortage of diverse and quality supply in Ho Chi Minh City compared to other destinations in the region.

“Previously, many investors rushed to seize the development opportunities of the tourism industry, but did not carefully consider the model and product selection. Many projects were built to meet the growth rate of some existing guest groups, instead of focusing on bringing products to attract new demand. Condotels in coastal destinations are an example of this, and we can see the difficulties that many condotel projects encounter when the market is not favorable, some even have to temporarily suspend implementation,” said Mr. Mauro Gasparotti.

With the above comments, many opinions believe that Condotel in particular and the resort real estate market will not be able to escape the "bottom" zone. Everyone still has to wait for the recovery of the tourism industry, as well as the removal of legal bottlenecks that still exist, with many expectations placed on the end of 2024 and early 2025.

Source: https://www.congluan.vn/chu-so-huu-condotel-van-cat-lo-o-at-de-chuyen-huong-dau-tu-post307862.html