Between the broken lines burden

I have warned that the condotel's profit commitment will have to be broken, right from the end of 2016 when this "movement" is strongest.

And last morning, sitting through the news, my eyes stopped at the word that was not good. The Cocobay tourist super project owner claims not to pay the condotel owners profits as committed. The investor's commitment to sharing investment benefits with secondary investors was unilaterally declared unfulfilled.

Recall, over the past few years, many reporters have asked me: "What do you think about the situation that all condotel project owners have committed quite high profits, from 8% to 12% of the investment capital for secondary investors? ". I answered them that this method of business is quite risky. Only the project developers have strong international relationships, ensuring occupancy of approximately 70% of the time can be done. Facing the current situation of condotel blooming, in the next two or three years there will be many investors who have declared unable to fulfill their promised profit rate.

Unfortunately, that day has come. It does not happen to an unprofessional project owner, but to a major project, Cocobay used to be the world's top destination. Just over the year before, the monumental ad for Cocobay, the world's "cool" entertainment venue, is everywhere.

Even football player Ronaldo said in an ad that Cocobay is "my home in Vietnam". I asked Cocobay investor, "You brought Ronaldo in, it must be elaborate and very expensive". "Business, as long as Ronaldo also advertises us," he said, and admitted very elaborate and expensive.

Earlier this year, many guests and I were invited to attend the Cocobay planning adjustment event. The event was very large, the guests were crowded, including many managers, journalists, artists, merchants and experts. Cocobay project master plan adjustment has been approved by Danang People's Committee, with many items. But the main content is to cut condotels, convert them into apartments, hotels and townhouses. This is indispensable, and the statement of failure to pay the commitment to profits is then inevitable. Because condotel is a new element of the market, but both government officials, project investors and secondary investors are still receiving it in the traditional economic style.

Condotel is a type of multi-function real estate that has long been formed in the world. In essence, this type of real estate meets many needs of life, when people are better off, need more accommodation in many different locations. They spend money to buy a second, third house to live in when needed, sometimes without need, then rent. Its name, hence, is a combination of condominium (apartment) and hotel (hotel).

From the perspective of economics, this type of real estate meets the needs of the shared economy - the type of economy that makes use of all resources so that the highest efficiency and value is used. Technology solutions are only one way to operate this model. Airbnb or Westay are also two models that are operating shared economy in real estate leasing.

But in our country, the central managers are still struggling with the question "What is a condotel" and conclude that it is real estate business and service. They translate into Vietnamese as "hotel apartments", ie apartments with hotel functions. In land management in Vietnam, for every residential house, land is used for a long time, and hotels are only used for 50 years. So "hotel apartments" have business purposes so the duration is only 50 years.

Tragedy at this very distinction in policy. Meanwhile, secondary investors only pour money into condotels when the apartment is established with their long-term ownership. The project investor also envisions that the condotel will operate in the traditional hotel style, so it must make a commitment of profit to the apartment owners, but on the other hand, they still want to use the land for long term to attract capital from. secondary investors.

In summary, in the context of the existence of a legal gap on condotels based on shared economy, all think that they are doing business in tourist accommodation in the traditional way. The contradictory nature has been revealed. The vitality of the shared economy has made the condotel grow like a storm from 2014 to 2018 with a few tens of thousands of completed apartments. By the end of 2018, many secondary investors turned away from the condotel. Project investors must convert condotels into traditional real estate. Commit to the benefit of breaking down from there. Traditional management thinking has ruined the vitality of the sharing economy.

Because it has not yet made a timely transition to the thinking of the sharing economy, the absence of a legal framework occurs due to the biggest fault among state officials. They are not strong enough to build a legal corridor for the sharing economy to operate. After all, both the project investor and the secondary investor are victims.

How many condotel projects will be declared unable to pay their committed profits? A major guideline that makes tourism become a key industry is meeting the stone in the way, which is the break of condotel.

Dang Hung Vo