VCN – Presenting from 2014-2015, the condotel segment (hotel apartment projects, villas, townhouses in the resorts) has become a fever in investment development in tourism real estate in Vietnam.
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Investors are looking forward to the date when the condotel segment is revised by an official legal document.
However, due to lack of legal regulations, there are many shortcomings relating to this segment, especially the granting of ownership certificates and the duration of ownership. Therefore, competent authorities should soon issue a formal regulation for this segment, which not only contributes to ensuring the interests of investors but also promoting tourism development.
Obstacles in law
Condotel is a new product of tourism real estate in Vietnam, which is being developed in the coastal areas and islands such as Quang Ninh, Da Nang, Binh Dinh, Nha Trang, Vung Tau and Phu Quoc. In which, Nha Trang, Da Nang, Phu Quoc are three areas of hot development. According to statistics of the Vietnam Real Estate Association, in 2017, nearly 23,000 condotel apartments were offered to the market with the number of successful transactions accounting for 65-70% of the offered volume. It is expected that in 2018 and 2019, about 20,000 condotel apartments shall be offered on average, with an area of approximately 45m2/apartment. Although it is very hot, but now, it also contains many problems associated, making investors as well as management agencies hesitant.
A major obstacle in the development of this segment is the legal factor. So far, there are not any official documents on this segment.
Deputy Minister of Construction Nguyen Van Sinh said that the laws relating to real estate such as the Law on Real Estate Business, Investment Law, Housing Law have not specified this segment. Therefore, the implementation of condotel projects in the past time has not been facilitated for both localities in investment calling, as well as for project investors in the product trading.
The most urgent obstacle is the granting of land for a long-term or 50-year, 70-year use and land for condotels as fixed-term commercial land or residential land. These obstacles affect the granting of land use certificates to condotel.
Former Deputy Minister of Natural Resources and Environment Dr. Dang Hung Vo said that the land allocation for the development of tourism and condominiums is facing a legal obstacle. He noted that the Land Law 2013 stipulates that land for condotel development is non-agricultural land for common use term of 50 years, in special cases of 70 years. However, some localities have allocated this land type in accordance with the regime of residential land use, it means long-term use. In addition, some localities still allocated this land type in line with the regime of service business with fixed-term use. "Probably, relevant ministries should propose legal solutions to the Government for early decision to remove this legal obstacle," said Dr. Dang Hung Vo said.
Land use right certificates for condotels have not been granted
In this regard, Chairman of the Ho Chi Minh City Real Estate Association Le Hoang Chau said that some investors have committed to the secondary investors to issue certificates of land use rights for long term for condotel apartments, but so far, land use right certificates for condotels have not been granted yet. Mr. Chau was afraid of that this commitment no longer complies with the provisions of Clause 3, Article 126 of the Land Law, which stipulates the duration of land allocation or land lease for organizations to implement investment projects for no more than 50 years, in difficult areas, no more than 70 years. Accordingly, under the current law, the land use rights for condotel apartments in resort projects are limited (under the project deadline) and can be extended.
In fact, many localities have issued regulations aimed at creating conditions for investors to implement tourism real estate projects by converting the use purpose of commercial and service land into "residential land without residential units forming" for condotels such as Khanh Hoa, Kien Giang, Binh Dinh, Da Nang and Quang Ninh.
Dr. Dang Hung Vo said that actually when the land for the development of tourism and resort real estate is used as residential land, it brings the efficiency of attracting large investment capital from secondary investors because they expect to have long-term land use right. This means that the adjustment of the law has a great impact on the development of tourism and resort real estate. "In my opinion, the current Land Law should be amended in the direction that tourism and resort real estate investors are allowed to choose the form of residential land allocation or lease for service business to carry out the real estate development projects. The local authorities have to allocate and lease the land chosen by the investors and the investors have to fulfil financial obligations according to that land type. Then, all information on land allocation and lease must be publicized so that secondary investors can decide on the investment." Dang Hung Vo said.
Regarding this matter, Deputy Director of Housing and Real Estate Market Management Agency (Ministry of Construction) said that before the strong development of the condotel segment, the Ministry of Construction had coordinated with the Ministry of Natural Resources and Environment, Ministry of Planning and Investment, Ministry of Culture, Sports and Tourism and consulted experts to better remove obstacles to this segment, and the Ministry of Transportation is proposing the Prime Minister for this matter. A representative from the Ministry of Natural Resources and the Environment said that the Ministry of Natural Resources and Environment and the Ministry of Construction will soon develop a legal framework for procedures for the granting of condotel certificates so that the investors shall be assured.
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Many others argued that, in order to protect the investors and stop the situation “implementing while worrying” when there is not an appropriate legal framework, as well as to create opportunities for this segment to continue its development to be a spearhead sector, the most important issue now is to soon develop adequate legal documents to adjust this type. In addition, forecasting trends and scale of tourists across the country as well as key areas for a harmonious and sustainable development for condotels.
By Hoai Anh/ Huyen Trang