Investment in condotels: 5 things you need to know

Resort real estate is one of the hottest types of investment today. It not only brings stable profits, high liquidity but also a safe investment solution. In addition, investing in condotels, beach villas also give investors the most comfortable experience and enjoyment.

1. What is a condotel?

Condotels is short for condo hotels and is a type of real estate investment. The first condotel in Vietnam is Nha Trang Plaza, which came into operation in 2009. Since then, waves of resort real estate construction have arisen in coastal cities such as Nha Trang, Da Nang, and Phu Quoc, where chances for tourism development are high.

Condotels thrive in coastal areas

Recently, many beautiful seas such as Ho Tram, Quy Nhon, Phu Yen have caught the attention of big developers. Construction works and development of condotels, villas and resorts are mushrooming, to meet the market demand. The competitions in prices, facilities, and profit commitments seem to be an easy problem to savvy investors, but 

. Meeting the investment and ownership needs of customers, projects that compete closely on selling prices, utilities and profit commitments .. These issues cannot be difficult for professional investors. But for those who are just starting out, investing in resort real estate will take time to evaluate and make decisions in order to have the safest investment option.

2. Factors need to clarify before deciding to invest in resort real estate

To make a right investment decision, investors need to think carefully and thoroughly. Here are 7 decisive factors, according to experts. 

2.1. The market’s development potential

Most investments in real estate need an overview of the market before deciding to invest. However, the criteria differ from each segment. To visualize the market development and be able to make a right decision, investors need to look at the following:

Choose high development potential project for a higher return on investment

• Infrastructure: Looking at the volume of investment in transport infrastructure is crucial because only upgrading in transport infrastructure would increase the linkage between regions, which is the top priority of holidaymakers, especially in resort tourism.
• Climatic conditions: All invested projects aim to satisfy people’s demands and preferences. However, coastal areas regularly suffering from natural hazards, namely tropical storms, are impossible to have sustainable development. Impacts of abnormal weather on tourism are severe; it negatively affects tourism and causes losses in profits.
• Balance of supply and demand: In resort tourism, supplies exceed demands will lead to rapid saturation. That directly affects the revenue and return on investment.

2.2. Legality

• Certificate of ownership and period of ownership

This is an important certificate that proves the ownership rights of investors and buyers. And also is their concerns when it comes to investing in real estate. As for seaside resorts, they are land used for limited-term, which must not exceed 50 years. Thus, most seaside condo-hotels don't have an ownership certificate of land, house, and land-attached assets, unlike other lands that have long and stable land use terms.

>>> Ixora Ho Tram by Fusion: 4 Perfect Advantages for Investors

Understanding of legal issues is an important criterion in any investment 

The bottom line in investment in seaside condotels is to determine the type of contract and transaction between the buyer and the project’s developers; the project's legal terms, provisions, responsibilities as well as regulations after the project expires.

2.3. Financial Capacity and Reputation of Developers

The experience and financial capacity of developers is an important issue that needs to be thoroughly explored and evaluated because it determines the probability to complete the project in accordance with the expected plan and commitment to investors. In addition, grasping and understanding the financial capacity and experience of the developers will help reduce risks, ensure time and ability to pay profits when the project is handed over and exploited.

2.4. Profit commitment

The committed profit will vary, depending on the location of the property and the developers’ regulations. Normally, it will be equal to or higher than the savings interest rate at a bank. However, investors should also consider carefully when the committed profit level is abnormally high. The profit is usually committed from the first 2-4 years of operation.

>>> Traffic infrastructure finished: Launchpad for Ho Tram real estate resorts

Ixora Ho Tram by Fusion offer an annual 6% profit from the first 4 years of operation.

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Nowadays, condotel and resort projects in Ho Tram beachfront guarantee an annual 6-8% profit. The number may fluctuate, depending on the time. However, one should be cautious when the committed profit is higher than 8%/year.

2.5. Property manager

Apart from finding information about the project developers, investors also need to learn about the company that manages the property when it puts into operation.
A proper operating method will contribute to improving the value of the property. And the transparency of information will help investors control revenue and profit.

Effective hotel management will contribute to higher profits

With a professional manager, your assets will be managed and operated in the best way, maximizing occupancy rate and profit.
All of the above factors will help investors choose the safest investment package. However, choosing a reputable and professional broker will save a great deal of time.
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