Because of this, investors and buyers of Condotel projects are facing undue high risks that will be difficult to resolve owing to lack of any clear existing legal framework.
JOURNALIST: - Sir, after the incidents at Condotel Cocobay in Da Nang, many investors and customers were disturbed when government agencies were unable to establish any proper standards or strict regulations on investing, trading, purchasing and handling of high-risk cases in such projects. What is your opinion?
Dr. VU DINH ANH: - The condotel market is a combination of three important markets, namely, real estate market, financial market and tourism market. Through the condotel, investors of real estate projects are able to boost new business investments for products that are a combination of apartments and hotels. This investment is not just in compliance with the development of tourism, especially in coastal areas, but broadens the practical experience of many owners in business development and apartment management that has been growing over the years. This is a significant solution in the context where some real estate market segments show signs of saturation and large concentration in central urban areas.
Because condotel is a combination of apartments and hotels with the main characteristic being shared economy, many existing regulations are unclear, especially in the government management of condotel projects. A range of issues arises inevitably, such as rights and obligations of concerned parties in the process of land allocation, land lease, allocation of land-use rights, rights of exploitation, benefit sharing, and resident rights. Noticeably, management responsibilities by government agencies are not clearly defined between real estate management agencies and tourism management agencies. Therefore, to issue legal documents that support the condotel market to develop successfully and make a positive contribution to the development of the real estate market and the tourism market in particular and the economic system in general, a legal system must be in place.
Reality shows that the administrative apparatus is still slow to respond to new demands in socio-economic development, especially new issues in interdisciplinary fields. Therefore, government authorities must issue official regulations on how to manage condotel projects, create a clear legal framework to prevent risks for investors and buyers, and maintain better control over such projects.
- Sir, representatives of the Ministry of Construction stated that a legal framework for condotels is difficult to establish because it is totally beyond the authority of the Ministry?
- Owing to the current urgent need to grow the economy, the legal framework related to condotel projects in particular along with other combination products for real estate in general should be developed further at the earliest to avoid escaping shared responsibilities as they are being now. Under the current status of the legal system and government management, I think there are many essential things to do right away. However, the most important and urgent is to focus on the responsibility of government agencies to manage better the real estate market. Accordingly, management methods for the real estate market must be based on current usage and purposes. For example, managing a house depends on its location, area, value, quality, and ownership, instead of specific purpose of owner like a residence house, a vacant house, a rented house, a house for office, or a warehouse. In reality, government agencies are out of control due to a large number of countless usage and purposes of houses.
- Before the legal framework is established, what should the concerned parties participating in condotel projects do to guarantee their rights?
- Condotel projects are attracting more and more investors owing to its profitable appeal in the primary market, rental market and sublease market. Similarly, customers who are using condotel products have more accommodation options at reasonable prices and for different utilities compared to traditional hotels and motels. On the other hand, condotel is one of the most typical products in the shared economy when the needs of owners, investors, and users are completely satisfied and simultaneously resources are also optimized.
In my opinion, the role and participation of condotel owners and investors is the most important factor in the process of building a legal framework for this product to guarantee the time frame and quality of legal documents. The legal framework for condotels must provide clear rights and responsibilities of owners, investors and users throughout the entire process of developing a condotel product. Simultaneously, there should be a transparent, feasible and effective mechanism to handle conflicts of interest among the parties involved, such as ownership, user rights, lessor rights, sublease rights and rental rights. As the condotel market has good chances to develop sustainably under a solid foundation, all the concerned parties must be assured of joining in this market.
- Thank you very much!