In the context that the market is lacking attractive investment channels for the investors, especially middle-class private investors, the recent real estate market has seen many new investment models, notably condotel and office-tel. These investment channels quickly absorbed the big cash flow and gained a lot of attention from many buyers. Although they are becoming the hottest investment channels of this year and is strongly continuing to grow, the legal framework for these types is still unstable and has many holes, which can create risks for both the developers and buyers.


Office-tel and condotel is booming

Office-tel, a hybrid between an office and hotel, is a self-contained living environment with an apartment and working space. This model saves much cost and time for the owners, especially suitable for small and medium enterprises who require small office areas. In the past 3 years, office-tel development has grown tremendously, especially in HCMC with 40-50 projects.

Since 2014, HCMC property market welcomed more than 8,000 office-tel. Currently, this type accounts for 15-20% in many real estate projects. According to information published by investors, the supply of officetel will be marketed in the next 12 months in HCMC is expected to reach 1,000-1,300 units.  Condotel – a blend of hotel and condominium that offers hotel levels of service with the independence of a condo and mainly develop in coastal regions. Nearly 2 years ago, about 3,000 condotel units were sold in Nha Trang, approximately 5700 units have been sold in the last 9 months in Da Nang; In addition, there are hundreds of condotels sold in Phu Quoc, Quy Nhon.


Condotel oversupply

Besides that, experts of the HoREA have expressed concern that the ongoing condotel market segment boom may lead to an oversupply in the upcoming time. 

Data of Danh Khoi A Chau Real Estate JSC shows that in the second quarter of 2017, there were over 1,800 condotel units offered for sale, up 88% compared to the earlier quarter. However, only 7% of them found buyers.

In 2017-2019, it is estimated that there will be 27,000-29,000 units launched a year. HoREA warned that this weak consumption might result in a condotel oversupply.

However, Nguyen Ngoc Thanh, Deputy President VNREA said that condotels have great development in Vietnam. He added, it’s too early to worry about an excess of condotel supply over demand since the demand was still high.

The same opinion, Huong Tran Kieu Dung, deputy chairwoman of developers FLC Group noted that condotel supply remained below the market demand, giving the increasing number of tourists and investing in condotels is a trend for smart investors.

Moreover, experts said clarifying the legality of condotels is urgently needed as this type of property is developing rapidly, but the absence of regulations carries risks for ownership and profit sharing.

Condotel and office-tel boom but legality is still ‘obscure’ 

It is undeniable that condotel and office-tel products with their outstanding advantages has already grabbed significant market attention, however, there is still no legal framework for this segment. And that’s a main reason which make customers hesitate to pour money into this product line like a few years ago.




In fact, to make their projects more appealing, some investors of condotel projects promise that secondary investors could get long-term land use right certificates.

Nevertheless, HoREA said such commitment does not comply with Clause 126 of the Land Law and the maximum duration of land allocation to an organization is just 50 years or in poor areas, 70 years and this are confusing buyers.

Moreover, there were no detailed regulations on the purpose of condotels as well as the fees to be collected.

Investors were also worried about the feasibility of returns that developers guaranteed and transparency on returning guaranteed profits, according to Nguyen Quoc Khanh, president of G5 Property Trading Floor Alliance. Popular rates of return that developers guaranteed for condotel investment were between 8 and 12% for a period of 5-10 years.

But buyers must do their due diligence before making any commitments because this promised return from condotel products become more risky as less experienced developers enter into large-scale projects with insufficient equity and financial backing, according to Rudolf Hever, director of Hotels at Savills Asia Pacific.

As the result, to promote condotel development, policies on ownership should be clarified and condotels should be added as a legal property product, Khanh said, adding that annual audit of condotel projects must be made mandatory to protect investors’ rights.



The same situation, Nguyen Tran Nam(chairman of VREA) said the legal system had not been adjusted to cover the office-tel segment and the biggest problem is whether a short- or long-term land use right certificate should be issued for the owner since an office-tel can be used for both living and work.

Nguyen Manh Khoi, deputy head of the Department of Housing and Real Estate Market Management at the Ministry of Construction, said that to build a legal framework for this type of real estate, there would be five things to deal with:

  •  First, an office-tel unit should be accurately defined as a mix of office and home, or an apartment unit.
  •  Second, ownership should last 50 years or longer.
  •  Third, there should be clear guidelines as to whether investors are allowed to develop office-tel buildings on residential or mix-use land.
  •  Fourth, if office-tel is seen as a home, investors must pay a different land use fee.
  •  Fifth, office-tel should have its own design standards, utilities and infrastructure.

There have not been any legal documents that recognize office-tels or apartments used as both homes and offices. Thus, real estate developers are offering the products, creating risks not just to themselves, but also to investors and buyers.

Nguyễn Trần Nam, president of the Việt Nam Real Estate Association, said that officetels should only be allowed in multi-purpose buildings that contain both residential apartments and offices. The space used for office-tels should be limited and not exceed 15% of living space of the building. JLL forecasts that future supply of office-tel will continue to increase because demand for office-tels is expected to rise due to the increasing number of startups and foreigners coming to work in Việt Nam.