Condotel Investments in: If you do not know how to play, easy to "holding the stick"

10/11/2016   Viewed: 964
Investments in hotel apartments (condotel) became the new trend in the real estate world in recent times.
 
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Unlike villas priced at tens of billion, the value of each condotel only 1 to 3 billion. This makes the product condotel investment real estate to be "sucked" a large amount of investment cash flow. So what is the condotel investment real estate?

Investment real estate "hot" in 2016

Stemming from the practical needs of the tourists stay, using models of luxury apartments (fully equipped self-contained devices such as an apartment usually), but is run as guest courtyard.

Tourists can still enjoy self-contained utility value of the hotel include a swimming pool, restaurant, room service, clubs, health care ... the condotel has formed since. This model is a combination of condominium and hotel apartments form the hotel (condotel).

Since bringing the cash flow from renting to tourists, so condotel was quickly associated with financial factors constitute a real estate investment products, "hot" in 2016.

By committing to profit from 8% to 12% fixed for many years as owners participate in the program for renting the apartment that investors make, condotel has become a real estate most preferred investment.
Value per condotel just over 1 billion to 3 billion. Plus support for loans from banks, investors just spent several hundred million is able to invest in condotel.

Launched in the context of Vietnam's market is the lack of investment channels have a fixed income for many years as bonds and certificates of real estate funds is, hit the right condotel investment needs of retail investors, cash flow. Therefore, this investment model to quickly create "waves" in the market is strong in tourism such as Da Nang, Nha Trang, Phu Quoc, Vung Tau, Quy Nhon, ...

According to the latest research from CBRE Vietnam, condotel booming market in Da Nang and Nha Trang.

Whereas, Nha Trang market fairly active, but only about 2,900 units supply, only in the last 3 months there were 2,800 condotel units were offered in Danang, nearly 8 times more than the same period last year and up double that of QII / 2016. Bringing the total number offered for sale in Da Nang condotel to 5,700 units in the last 9 months.

"The play" is not simple

However, if investors do not know how to play, it is like "holding the stick". Say so because condotel investment is not simply just look at the flashy behind the numbers committed to profits, but do not then there are many factors that investors need to take into account the right decision.

Said Mr. Zhang Le Quan, Investment Manager, Savills Hanoi "promise to pay a fixed average profit of 8-10% / year in 8 to 10 years, the same issuing bonds, meaning that owners incurred investment obligations for repayment of interest in the commitment period. "

When investors are jumping into the game committed profitability, interest rates are constantly being pushed up, initially from 8% to 12% and even 14% project. This in turn brought one of the risks for investors.

But, that's only half right, because the good projects, project owners have many assets, cash flows are still strong enough to ensure this source of repayment. So what happens if the investor fails to pay interest commitments within committed? Investors are not banks, and this is the risk.

Therefore, if you jump into "the game" is the first thing is very important for investors to know that the interest repayment obligations must be clearly stated in the contract. Second, the project investors who, with enough capacity to implement and operate the project to bring good steady cash flow or not.

Another feature of particular note as well that is committed to profitable levels. In fact, this model is not new in the world, for example in Singapore about 4-9% in 2 years, in Thailand about 5-10% in five years, and has a lot of successful projects.

In Vietnam, the committed profit was pushed up very high, even the project owners no longer commit reputation 12-14%. A figure that experts be startled.

According to Savills, the commitment of income is only one form of marketing to accelerate sales. It's just a technical financial investor. Ms. Yang also said Thuy Dung, director of the market research department of CBRE Vietnam, which hit investor sentiment relief of investors, with a fixed profit, no need to worry at all .

And analysis of Cushman & Wakefield Vietnam, said that in some of the projects the rate of EBITDA (earnings before tax, interest payment and amortization) of 35%, the breakeven point enough profit to pay for the first commitment investment projects should reach 60% capacity. Meanwhile, the average rental rate for hotels in Vietnam is about 65%. The percentage difference is not too much, this is a risk for investors.

Floating rate factors are also important points of risk and investors should consider. While home buyers loan projects with fixed interest rates is committed to profitable levels, the investor has to bear a floating interest rate under the loan market if purchased condotel investment bank. Do not forget to have time interest rates have shot up over 20%!

Note the legality. Use of long-term asset appreciation expectations and fixed income is guaranteed. This can be considered a key factor to attract buyers because they understand the power to use and exploit the property. But, sometimes the expectations this 3 brings trouble for investors

In fact, there are many resort projects only commercial land leased long-term to the hotel business should the condotel will not be issued a certificate of property ownership. Rental values ​​are not as high as expected impact on annual cash flow immediately. Without regular tenants, the property after the time commitment may be downgraded, the value will be reduced and the owners extra maintenance costs.

Thus, we can say condotel is a real estate investment products are very popular, create attractive than bank deposits. But to choose the condotel really effective, it is not a simple problem.

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