VietNamNet Bridge - Though hometel properties are new in Vietnam, the segment is well known as a profitable business model as investors can make high profits when reselling or leasing.

Hometel has all basic features of a high-end apartment that serves as long-term accommodation for the owners. In addition, hometel has all 5-star services and amenities, so it can ensure comfortable lives for the owners, while it can be re-leased if the owners want.

Hometel buyers have long-term ownership for hometels and they have land use right certificates, or a ‘red book’ as called by Vietnamese.  

Meanwhile, condotel owners only have ownership for up to 50 years. The other important difference between condotel and hometel is that the owners of hometels can determine the lease plans and they don’t have to share profits with investors.

In other words, hometel owners have permanent ownership over their properties, while they can make decisions themselves to make profits with the assets.

However, hometel also has disadvantages. Investors will have to operate and manage the leasing themselves. 

Therefore, they need to have good knowledge and skills to manage the assets. While condotel and officetel owners can foresee profitability of their investments, hometel owners cannot.

The other disadvantages include limited access to bank loans, interest rate unpredictability, the lower-than-expected income and cash flow interruption when making payment for bank loans.

Nguyen Van Duc, deputy general director of Dat Lanh Real Estate, said the capital flow to the real estate market, especially to the high-end segment, has been tightened with  Circular 06 officially taking effect in 2017.

This will have direct impact on the scale, conditions and interest rates of bank loans reserved for the high-end segment, including hometels.

He said the interest rate has been stable, but no one can say for sure how the interest rate will perform in upcoming years. Therefore, an interest rate risk always follows investors.

The Vietnam Real Estate Association’s secretary general Tran Ngoc Quang commented that investors understand they have to accept risks when they are the pioneers. 

However, research and experience show that hometel is a promising business model.