VCN –Nguyen Ngoc Thanh (photo), Vice president of Vietnam National Real Estate Association (VNREA) spoke about the difficulties and solutions to remove obstacles for the condotel market.
|Nguyen Ngoc Thanh, Vice president of Vietnam National Real Estate Association (VNREA)|
In mid-February 2020, the Ministry of Natural Resources and Environment (MONRE) issued document 703/BTNMT-TCQLĐD providing guidance on land use policies and ownership certification of non-residential constructions, including tourist apartments, also know as condotels. How did you evaluate this document of MONRE?
With document 703 of MONRE, I thought it was a very basic document. This document confirmed the legality of this segment and implemented instructions for registeration of certificate of ownership. This was a very positive document, ensuring the needs of the reality. However, the problem was that units owing this product must comply with registration procedures as stipulated in the instruction process. When registering, depending on the project, the steps would be given to complete dossier. There were some previous projects that have completed procedures, but some were missing. To register for land ownership certification for the project, it would be related to documents like land allotment decisions (if the decision was not clear, it would need to amend for clarity), approval of the plan (it must have project planning as condotel) on that basis, they could implement registration of certificate. So, it was only the specific implementation process of those steps to registration of certificate. In the past, we have not done it but document No.703 set the basis for implementation. Enterprises were very happy to receive this information and are taking steps in accordance with the process to complete the application.
However, in my opinion, the current shortcomings of the condotel market are not only about the disagreement in the registration procedures, but also many other shortcomings that need to be further solved to remove difficulties for the condotel market.
Could you specifically detail the current shortcomings of this market?
The shortcomings of condotel segment are, besides the product of hotel apartment and villas (as mentioned in document No.703 of MONRE), townhouses have not been mentioned yet. It is possible that, during the drafting process, the drafting agency had not fully covered it. Therefore, in my opinion, it is necessary to supplement. Although the quantity of this product is not much, in fact, it already existed as the needs of life. Therefore, I thought the Ministry of Natural Resources and Environment must conduct research to have a complete and unified legal document for this segment so these products can be used legally.
The second problem was that, in documents among ministries and sectors, there was no agreement about the concept. The concept of condotel in the Tourism Law was incompatible with the concept of condotel of the Ministry of Construction under the Housing Law. In the document of Ministry of Natural Resources and Environment, it has not resolved this inconsistency yet. For example, the concept of a condotel in the Housing Law was that a condotel was an apartment in a mixed-use building used as a residence for tourism needs and it has existed for a long time. However, in fact, it has developed so fast with huge demand so that owners did not make tourist apartments in mixed buildings anymore. They built blocks of flats with the purpose of using all condominiums as condotels. The conceptual inconsistencies lead to issues in planning. This means condotels which were not in mixed buildings would not be planned. Therefore, the legal documents needed to be adjusted, this adjustment is objective, inevitably following the development trend, because previous regulations were not completed. As such, it is necessary to have a conceptual agreement to agree on proper legal procedures.
The third problem was that when talking about apartments, it would be condominiums, but current regulations on condominium management and operation cannot apply to condotels. There is no regulation on management and operation for condotel. The management and operation of condominiums are different from the operation of condotels because of issues relating to ownership. There is a differentiation in the private ownership and common ownership of condominiums but in fact there is no existence of common ownership of condotel. Owners sell apartments to secondary investors and then they directly operate, manage and exploit them. The secondary investors only own apartments that had been purchased and are not entitled to common ownership. Therefore, regulations on the management and operation of condotels should be issued soon and unified for investors to fulfill their responsibilities, helping consumers and investors have full legality to exercise their rights.
|In terms of financial investment, from the perspective of economic and social development, Condotel is the type that needs to be encouraged for development. Source: Internet|
Time-limited real estate ownership is currently a trend across the world, but in Vietnam this trend is not really popular because the mentality of Vietnamese people means they still want to own houses and land in the long term. So what needs to be done to make this trend more popular and contribute to the development of condotels?
There are two trends on the market: long-term property ownership and short-term property ownership. In the world, these forms of ownership are not special, depending on the nature of each project. The problem is whether the owner is public about this or not. To avoid confusion for consumers about when real estate should be long-term property ownership, when introducing products to the market, owners must provide full information to buyers about the legality of a product and make it transparent and public, avoiding confusion. In fact, there are people who prefer long-term ownership but some people want to own for a limited period of time. So it depends on the use purpose of the consumer.
In recent times, the issue of profit commitment of condotels has pushed the conflict between the secondary investor and the owner in many projects to a height when the owner failed to fulfill the commitment with the customer. Could you please tell us your opinion on profit commitment of condotels?
The collapse of the Cocobay project was a very practical lesson for investors. We should not have too great, too optimistic expectations on a project but separate from the market element. We need to consider the supply-demand relationship in the market. On the investor side, in my opinion, they should not make impossible commitments because of the implementation of competitive objectives. In the case of the Cocobay project it was impossible to fulfill its profit commitment. However, the profit commitment was the right of enterprise, the State did not intervene. If the enterprise could not fulfill the commitment, they would be responsible before the law when the relationship between the investor and the owner could not be resolved and led to bringing the case to court. This was clearly a lesson for investors and consumers to be cautious when making their decisions, they should assess the issue objectively and recognise problems more realistically. If there is a lack of objectivity and reality, it will bring risks.
Besides that, in the process of making investments, investors needed to have a practical assessment of the market. The market is a variable element so the competition in the market would make it more intensive and drastic. Therefore, beside technical and economic solutions, the evaluation for the whole project, for each product segment, must be taken seriously to ensure the development process that the project owner offers. Not only receiving information from owners but consumers must seek more additional information to evaluate and ensure implementation of investment objectives in the whole investment process.
By Hoài Anh/Thanh Thuy