Though introduced to Viet Nam a decade ago and experiencing rapid growth in the last three years, office-tel apartments have not received official legal recognition in Viet Nam.
An office-tel, a hybrid between an office and hotel, is a self-contained living environment with an apartment and working space.
The live-and-work concept originated from South Korea about 30 years ago, and first appeared in Viet Nam in Ha Noi and HCM City.
HCM City has around 40 to 50 real estate projects offering office-tels by major developers, including Novaland, Vingroup, Sacomreal and The Manor.
Property market researcher CBRE Viet Nam said that about 8,000 office-tel parcels would be offered in the city by the end of the year.
An office-tel parcel usually takes up less space than a residential apartment, and thus is considerably cheaper.
At the price of VND30-35 million per sq.m, a parcel of 39-49 sq.m costs around VND1.5 billion (US$65,835). The price is especially appealing to startups and small enterprises with limited financial resources.
Real estate consultant Cushman & Wakefield said that 40 per cent of users of office-tels in Viet Nam are small- and medium-size enterprises, startups and representative offices of foreign firms. They usually have fewer than 10 employees.
With sky-high rental costs in downtown HCM City, startups and small companies can more easily find a place to use both as a home and a workplace, saving money and commuting time.
As office-tels are usually located in luxury residential buildings, the occupants can use their facilities such as gyms, pools, parks and playgrounds.
Demand for office-tels is expected to rise due to the increasing number of startups and foreigners coming to work in Viet Nam, experts have said.
Legal framework
Despite benefits, the lack of a legal framework for office-tels is a big downside that worries real estate investors.
According to the 2014 Housing Law, residential buildings cannot be used for any purpose other than residences.
There have not been any legal documents that recognise office-tels or apartments used as both homes and offices.
Because of the legal vacuum, each local authority has a different way of dealing with this new product, depending on their interpretation of it.
Real estate developers are offering the products, creating risks not just to themselves, but also to investors and buyers.
Nguyen Tran Nam, president of the Viet Nam Real Estate Association, said that Ha Noi had almost never granted permits to developers to build office-tels.
HCM City may be more flexible on the issue, but developers will still have to give explanations if there are inspections, he said at a seminar on office-tels held in the city last week.
Buyers can own office-tels for up to 50 years, but they are not granted a house ownership certificate. Thus, they cannot register it as a residential property.
While many home developers and consultancy firms who lean toward office-tels say this is a promising segment, Nguyen Van Duc, deputy director of Dat Lanh Real Estate, warned that occupants of residential buildings would oppose putting office-tel units in their apartments.
Duc pointed out that it would be unfair, for example, for 10 occupants of an office-tel unit to use the building’s common facilities while paying the same management fee as three occupants of a residential apartment.
He said that, without clear regulations, developers will be inclined to put more office-tels in their projects because they do not take up as much space as residential apartments. Buyers would then use them as a place to live, not to conduct business activities.
Nam, speaking from his experience as former deputy minister of construction, said that office-tels should only be allowed in multi-purpose buildings that contain both residential apartments and offices.
The space used for office-tels should be limited and not exceed 15 per cent of living space of the building, he said.
Office-tel buildings should also have their own design standards, utilities and infrastructure, he added.
Nguyen Manh Khoi, deputy director of the Ministry of Construction’s Housing and Real Estate Market Management Department, said the debate on whether an office-tel unit is a home or an office leads to many questions.
Should the Housing Law or Real Estate Business Law be used to regulate the office-tel segment? How can occupants of office-tels be granted house ownership certificates? Is the land-use fee different for developers of this type of product?
It would take three years before a full legal framework dedicated to office-tel segment is in place, he said.
In the meantime, experts say that, as the country is encouraging startups, there should be exceptions for startups that mostly operate indoors with two or three staff. — VNS