Condo hotels - buildings used as both a condominium and a hotel – are a new phenomenon in Vietnam. This form of real estate is catching the attention of investors because of its high liquidity. Condo hotels are expected to be profitable investments. However, to possess this type of vacation home, buyers and investors need to weigh up the difficulties of their target projects.
Condo hotel phenomenon in Vietnam
Condo hotels are typically high-rise buildings developed and operated as luxury hotels, usually in a major city or resort. The hotels have condominium units which allow someone to own a full-service vacation home. Unlike ordinary apartments, Condo hotels have a reservation system and services like swimming pools, health clubs, nightclubs, restaurants, shops, mailing services and 24 hour room service. Condo hotels are not the same as true hotels, as they allow investors to buy out vacation apartments to live and to rent.
In the United States, Condo hotels are one of the most attractive segments of the real estate market. Each month, big real estate brands like Trump or Ritz Carlton build condo hotels in resorts or cities. And this type of real estate has spread to Dubai (the United Arab Emirates) and Berlin (Germany).
In Vietnam, the Condo Hotel concept is entirely new, but quickly flourishing since it was introduced, with several first projects like The Nam Hai and Son Tra Resort and Spa. Nha Trang Plaza Hotel invested by Best Western Group is the first true Condo Hotel in Vietnam. With 40 rooms and 240 apartments, the five-star condo hotel, scheduled to be completed in late 2010, is quickly catching the attention of investors.
Da Nang City also has some similar projects, including Olalani Resort and Condotel Resort (next to Furama Resort and Son Tra - Dien Ngoc Route) including three large villas, 88 condo hotel units and 197 hotel rooms with services like spa, mini golf, casino and water sports; and Hyatt Regency Danang Residences with 174 condo hotel units. The 5-star Ocean Vista Condotel is built in Phan Thiet City, Binh Thuan Province by Rang Dong Construction Group.
At the end of 2010, Sea Star Suite invested by Saigon - Ho Coc Joint Stock Company in Xuyen Moc, Ba Ria - Vung Tau province will supply a condo hotel to the market. The project is consulted and managed as a five-star hotel by Furama Hotels and Resorts International (FHRI) Hong Kong.
Relatively new investment channel
According to an official from Saigon - Ho Coc Joint Stock Company, Condo Hotel is attractive for wealthy people who are keen on enjoying their life in prime locations. They also like their second homes to be fully managed by a professional unit and to be ready whenever they come. In addition, they want to experience utilities and services provided.
According to real estate experts, for investors, condo hotels have a quick rate of payback. Like selling apartments, condo hotels can bring immediate profit. At the moment, due to limited supply, the price of condo hotels is estimated to climb relatively quickly. Investors can lease their condo hotel units if they cannot sell them. Besides, retail investors can easily transfer them to others.
However, this project poses hidden risks like ownership. With many different owners with different tastes and lifestyles, it is more complex to manage, lease and maintain.
Papers related expenses paid to the management unit are also a headache for owners, and they must book their apartments before they come as their apartments are still a hotel.
Condo hotels are still very new in Vietnam, even in the world. Thus, this is a potential but challenging investment channel.
P.V
Vietnamese
