Hybrid real estate is booming, investors benefit, customers beware of risks

Hybrid real estate forms are seen as a form of product innovation by investors, aiming to create an attractive investment channel for investors.

Hybrid real estate has gradually become a bright spot in the Vietnamese real estate market in recent years. Currently, there are three types of hybrid real estate on the market - officetel (office apartment), condotel (hotel apartment) and hometel (hotel house).

Specifically, officetel is a product combining office and hotel with a 50-year ownership period. Officetel is usually located in the commercial base of an apartment project. Since 2014, the real estate market in Ho Chi Minh City has welcomed more than 8,000 officetels.

In the rental market, officetel has two advantages - the area of ​​the unit is smaller than that of an apartment and the address can register a business license, while the address of a traditional apartment cannot do the same. Besides, the service fee and management fee of officetel is lower than that of office buildings. The target tenants of this type are small start-up companies and tenants with limited budgets.

Condotel is a hybrid product between an apartment and a hotel with a 50-year ownership period, while hometel has similar functions but has a permanent ownership period. These two types of real estate are managed in the form of a high-end hotel complex and a multi-ownership serviced apartment. Owners can stay and enjoy the services, amenities, and resort facilities within the project.

Condotel projects are mostly located along the beach or tourist destinations and are operated by reputable operators, while hometel projects are usually located in city centers - specifically in the Hanoi and Da Nang real estate markets - and are operated by owners.

Hybrid real estate forms are considered a form of product innovation by investors, aiming to create an attractive investment channel for investors. All projects of this type have achieved high sales rates, most of the projects are consumed in the entire quantity opened for sale during the project introduction event.

According to Mr. Ty Ga Nguyen, market research & consultant, JLL Vietnam, hybrid real estate is attractive to investors because hybrid real estate is designed, developed and advertised for the purpose of buying and renting, providing an alternative investment option for investors who want to diversify their investment portfolio. Second, these types of real estate have the characteristic of small area requiring low investment, making investors willing to expand their investment.

Besides the benefits and profits from “hybrid” real estate, JLL representative also said that investors also face disadvantages of this type. The legal framework for “hybrid” real estate is still unstable and has many loopholes, which can create risks for investors.

A typical example of an officetel is as follows, where an officetel coexists with an apartment project and can lead to difficulties in project management. In addition, investors often take advantage of the unstable legal framework to convert the commercial project into an officetel project to quickly recover capital. In this case, the developer and investor achieve maximum benefits, but the benefits of residents and tenants are reduced corresponding to the reduction of amenities and facilities.

"In the future, the supply of "hybrid" real estate will continue to increase. Therefore, the real estate market really needs a complete legal framework for this type to regulate the market in the most reasonable way to ensure that investors harmonize the interests and balance the needs of both buyers and residents of the project," Mr. Ty Ga Nguyen emphasized.

According to Young Knowledge