Hotel Managed Condos
Hotel managed condos are condominiums that have the rentals of their rooms managed as a hotel usually by a well recognized international hotel brand. Hotels brands are professionals in the rental management business so therefore are able to generate higher than average returns for investors.
Hotel managed condos are perfect investment for repeat visitors to Thailand who love the lifestyle it has to offer and who wish to be part of the growth that they can see with their very own eyes.
At present a handful of condos and apartments in Phuket are set to be managed by hotel brands when complete and this trend looks set to continue. The hotel managed investment offered to buyers tends to feature:
- An initial period of guaranteed returns, usually 6 – 8% for 2 to 5 years.
- A time period in which owners can stay free of charge, usually 14 – 45 days per year.
- Compulsory purchase of a furniture package.
Guaranteed Returns and Beyond
The guaranteed returns are offered because hotel brands recognize that it takes a new hotel a couple of years to achieve high occupancy levels and average room rate so rather than asking investors to suffer in this establishment phase, they are instead offered an attractive guaranteed return.
After the initial period of guaranteed returns has expired investors are able to join the hotel rental pool where they receive a return based upon occupancy and room rate of their unit. Buyers also have the option to by-pass the hotel and rent out their units themselves or live permanently as a resident. Around 70% of the units in a development will be rented out as part of the hotel management program but many developments also feature larger units types suitable for full-time living can also be considered as a residential property.
Under the hotel managed program owners can stay in their condo units for between 14 and 45 days per year depending on the development. There are usually some block-out periods such the peak season over Christmas and New Year period.
Hotel Managed Condos
This modern sea view condo in Surin as well as being hotel managed upon completion in two years time, has the added financial security of being developed by Thai Public Limited Company (PLC) listed on the Stock Exchange of Thailand (SET). 7% guaranteed rental return is available for 3 years with an option to extend for a further 3 years or join the rental pool.
Another example, is this modern style condo in Bangtao which is close to completion and is managed by and popular and experienced Asian based brand. 7% rental guaranteed return is available for 3 years. Further away on the horizon and not completed until 2019 is this beachfront condo in Kamala which will be managed as a 5-star hotel. It has panoramic sea views of Kamala Bay located amongst prime real estate. 7% return is guaranteed for 5 years.
Tips for investors
When considering investing in hotel managed condos we would encourage investors to look beyond the initial guaranteed returns offer and study closely the longer term prospects such as the location, past performance of the hotel management company and how well a chosen room type will perform in a rental pool.
Another consideration is that significant capital gains will be realized upon investments in well managed developments. As well as usual demand factors affecting price, the rising average room rates and occupancy rates will increase returns year upon year which will also have knock-on affect on price.
Under a worse case scenario under a market downturn when 50% occupancy for the whole property becomes the average is it going to be the garden view or the sea view units which are going to have the highest occupancy and the best returns?
Finally, an important thing to note is that as the hotel will be managing the maintenance of the property it will be in their best interests as the years go by to make sure facilities are maintained to high hotel level standard.
Please do not hesitate to contact us directly if you would like to further information. We provide free consultation and advice and guide our customers every step of the way through the purchasing process.
Alex Seago is the Managing Director of Phuket Condo Co. Ltd. You can check out his profile here: http://www.phuketcondo.net/about-us/