When the marketing for Cocobay Da Nang condotel resort in Da Nang kicked off, footballer Cristiano Ronaldo was hired to promote the project with the Juventus forward going so far as to buy a unit himself, or at least claiming to do so. However, the developer behind the project has now scored an own goal when it comes to the returns it promised investors.
Vietnamese developer Empire Group has revealed that it will stop paying investors their 12 percent annual rental returns for units in Cocobay Da Nang. VN Express International reported that Empire Group Chairman Nguyen Duc Thanh told at least 1,700 buyers that the firm’s financial difficulties meant it was unable to continue paying promised returns. Payments will be halted at the start of next year.
Work began on Cocobay Da Nang in 2016 with initial plans calling on the developer to spend USD5 billion to build 10,000 condotel units designed to take advantage of Vietnam’s tourism boom. The following year, Empire Group hosted a launch party for Cocobay Da Nang in Spain with then Real Madrid superstar Ronaldo announcing he had become the project’s first official resident.
Currently only 3,000 units have been completed at the hospitality and entertainment complex. It is unknown if Ronaldo’s unit was among those that weren’t delivered by Empire Group or if he actually followed through on the purchase promise.
Investors handed an unfortunate “L”
Fast forward to 2019 and investors at Cocobay Da Nang are now taking a loss. VN Express International revealed Mai Huyen Tan, CEO of Hanoi investment consultancy ViDe Bridge, invested USD25.9 million in the project. He now faces bankruptcy if the developer stops paying the promised returns.
Meanwhile, individual unit buyers are struggling to find a solution due to the limited legal framework regarding condotels in the country.
“Although Prime Minister Nguyen Xuan Phuc has ordered ministries to finalise regulations on condotels, there has been no official document providing guidance on dealing with this kind of property even though they have been developed for three years,” Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association, told local media.
Empire Group Chairman Thanh has offered unit owners a deal that would pay them an extra 15 percent of their investment to turn the condotel into an apartment. Alternatively, he said refunds may also be possible.