The end of the ‘cash cow’ era: Central Vietnam condotels give way to luxury apartments

After a boom period fueled by attractive profit commitments, the condotel segment in Vietnam’s central city of Danang has entered a prolonged downturn, while the high-end apartment segment is rapidly gaining momentum as the new focal point of the coastal urban real estate market.

Condotel market remains sluggish

Following the overheated growth period from 2017 to 2019, Danang’s resort real estate market is undergoing a major transformation. While condotels were once considered a symbol of the coastal tourism city, backed by lucrative profit guarantees, the segment is now facing an extended period of stagnation.

According to a report by real estate consultancy firm DKRA Group, the condotel market in Danang continued to encounter significant difficulties in Q1/2026, with primary supply declining by 9% quarter-on-quarter.

Notably, over 99% of market supply came from inventory at older projects, while no new projects have entered the market for more than a year.

Market liquidity remained extremely weak. Amid persistently high interest rates and tight credit controls, condotel transactions fell by approximately 87% compared to Q4/2025.

At the same time, stimulus policies such as interest rate support, revenue-sharing schemes, and profit guarantees continued to be implemented by developers but failed to produce clear results.

The report also noted that An Hai ward continued to lead the market, accounting for 57% of total primary supply and all primary transactions during the quarter. However, transaction volumes remained modest, indicating that investor confidence has yet to fully recover.

The decline of the condotel market is not only due to weak liquidity but also long-standing legal issues. Although Danang’s tourism sector has shown signs of recovery, many projects have yet to complete procedures for ownership certificates, while construction progress has slowed because of capital shortages. Rising financial costs have further prolonged the market slowdown, with no clear signs of short-term recovery.

This situation reflects a strong market correction in what was once considered the “golden goose” of central Vietnam’s resort real estate market. During the 2017-2019 period, condotels flourished thanks to rapid tourism growth and aggressive profit commitments.

However, when the market entered a correction cycle, many projects failed to fulfill promised returns, severely damaging investor confidence.

DKRA Group forecasts that new supply in the resort real estate segment will likely remain absent in the near future. Developers continue to maintain a cautious stance amid a sluggish market, high borrowing costs, and unresolved legal bottlenecks. Market liquidity is expected to remain weak, with no obvious recovery signals in the short term.

Luxury apartments take center stage

While condotels are losing momentum, Danang’s apartment market is entering a strong growth phase, with a clear trend toward premiumization. Instead of relying on tourist apartment products, many developers have shifted toward long-term ownership residential apartments to meet both end-user demand and long-term investment needs.

One recent example is the Danang Times Square project, where 569 out of 575 units in towers CT3 and CT7 became eligible for sale after being converted from condotels into residential apartments.

The project is developed by Kim Long Nam JSC and is located along the Pham Van Dong-Vo Nguyen Giap corridor, overlooking My Khe Beach. The conversion is seen as a clear indication of the market’s product adjustment trend to better align with actual demand and legal requirements.

According to property service provider CBRE Vietnam, Danang recorded more than 8,000 newly launched apartments during the 2024-2025 period, a sharp increase compared to the pre-2024 period, when fewer than 1,000 new units were offered annually. By Q1/2026, the city’s cumulative apartment supply had reached about 16,000 units.

A notable trend is the increasing premiumization of the market, with nearly 60% of new supply in 2025 belonging to the high-end segment. In Q1/2026, all newly launched apartments belonged to the luxury category, pushing average prices up by around 12% year-on-year.

Despite rising prices, absorption rates at new projects still ranged between 50% and 60%, indicating that purchasing demand has not significantly weakened. Danang continues to be viewed as a “safe haven” for investment capital, supported by attractive rental yields driven by the strong recovery of tourism and the short-term accommodation market.

CBRE Vietnam forecasts that the city will continue to welcome substantial new apartment supply in the coming years, averaging around 5,000 units annually. Prices are expected to continue increasing by approximately 10-12% per year due to the city’s mid- to high-end apartment development orientation and the scarcity of land along the beachfront, riverside, and central urban areas.

According to Duong Thuy Dung, executive director of CBRE Vietnam, with lending rates still relatively high and investors continuing to dominate the buyer pool, the market’s key challenge is now absorption capacity. This forces developers to adopt more cautious development strategies, balancing selling prices with actual affordability.