Condo Hotel Center: Property
Alert
December
20, 2006
Condo Hotels
A Look Back
at 2006 and a Glance Toward the Future
 Joel
Greene here from Condo Hotel Center. The holidays
are upon us, and I thought rather than present a new
property, I'd use today's newsletter as an opportunity
to do a year-in-review on condo hotels and maybe a
little prognosticating on the future. I've also included
pictures of some of our most popular properties in
2006.
Overview
What a year it's been! We have certainly seen tremendous
growth in the condo hotel market. When we first started
Condo Hotel Center back in 2002, our biggest problem
was finding inventory.
We launched our website, www.CondoHotelCenter.com,
featuring only a dozen properties, and all of them
were in South Florida. Now we have over 120 properties,
and they're located from Miami Beach to Wisconsin
to Morocco, England and Dubai. Developers not just
in the U.S. but around the world are recognizing the
viability of the condo hotel concept.
The
Blue Rose Resort Hotel will be a $600
million destination resort in Orlando with Vegas-style
entertainment venues.
Not only have the quantity and diversity
of condo hotel projects grown significantly, so has
the demand for them. The word is getting out across
the country and the world. Vacation home buyers now
know they have an alternative to traditional condos,
single-family homes and timeshares -- condo hotels.
Quality
of Projects
We're often asked if we display all available condo
hotels on our website. The answer is no. We
seek out the best properties on the market, and you
should too.
The fact is, not all condo hotels
are good and not all are bad. Like any other type
of real estate investment, every condo hotel must
be individually evaluated based on its own merits.
The four-star Fairmont Pompano Beach
in South Florida will include restaurants, shops,
plazas, a spa and more.
The best properties will do well in
meeting owner and guest expectations. They'll produce
a substantial revenue stream that will offset ownership
costs, possibly more, and they're likely to appreciate.
The lesser-quality projects may not ultimately get
built, or if they do, could leave their owners dissatisfied.
Best
Time to Buy
We at Condo Hotel Center have continually stated and
still believe that the best time to buy a condo hotel
unit is at the very beginning of the selling process.
That's when prices are lowest and selection is greatest.
Those of you who've been long-time
Property Alert subscribers also know that we do our
best to get you in the door before the general public
and to even use our clout to get special buying incentives
for our clients. These are the kinds of things that
contribute to your profit when you ultimately resell
your condo hotel vacation home.
The other great buying opportunity
sometimes occurs at close-out when there may be just
a handful of remaining condo hotel units that the
developer is motivated to sell so he can move on to
his next project. Such is the case right now at the
The
Signature at MGM Grand in Las Vegas
where you can get a good discount on one of the last
units. (Contact
us for details.)
The
Signature at MGM Grand
has just a few units left, available now at special
close-out pricing. Contact
us for details.
Who's
Buying?
The market is changing. Now, versus a year or two
ago, we are seeing fewer speculators and more buyers
who intend to use their vacation home, not just flip
it for profit. This is a good thing.
Yes, increases in property values
will not be as quick, but we'll also see fewer "flippers"
rushing to sell immediately after closing, which can
cause a flood of inventory on the market and potentially
drive values down. Slow and steady increases in the
form of sustainable growth are best.
The biggest target market for condo
hotels is baby boomers. The boomers are thinking about
vacation homes and retirement homes. They don't have
enough time or interest to manage real estate. They'd
rather work on their golf handicap or tan versus their
lawn.
The
Fairmont Tamarack, Idaho, is
a 5-star condo hotel ski resort being built by tennis
greats Andre Agassi & Steffi Graf.
These are people who have either inherited
a great deal of wealth or have earned wealth -- and
there are millions of them. Their behavior is that
of a spender, rather than their parents' generation,
who were savers.
When you factor the use they might
get out of a weekend residence against the aggravations
of ownership, it's easy to see why condo hotels have
appeal to them.
In a world where the most limited
commodity is time, condo-hotel living gives affluent
homeowners 'round the clock access to five-star amenities,
the comfort of knowing that their homes are safe and
secure, an upscale environment of the first order,
and a sound investment.
75 million baby boomers in the U.S.
will retire in the next 15 years. If just 5% choose
to own just one condo hotel unit as a seasonal second
or third residence, 3.75 million units will be sold
or 250,000 units annually.
Realistic
Expectations
More condo hotel buyers are becoming knowledgeable
about condo hotels. They realize that due to stringent
SEC laws in the U.S., developers cannot provide revenue
projections.
A condo hotel cannot be sold as an
investment; it can only be marketed as a vacation
home and a lifestyle. While this frustrates many buyers
who'd like to know all the numbers before they buy,
the laws are designed to protect consumers from inflated
estimates of future income.
Condo hotels are, first and foremost,
hassle-free, luxurious vacation homes. Buyers are
no longer insisting on a great cash flow, but are
content with break-even situations so long as there
is good appreciation potential. (The exception to
this is properties in countries like Dubai where investment
is clearly the primary objective.)
Location
Still Matters
The best locations for condo hotels continue to be
those that are obvious tourist destinations, where
a strong demand for hotel space is matched with a
location where buyers would want to go again and again.
That's why places like Orlando, Fort Lauderdale and
Las Vegas are prime condo hotel territory.
Trump
Las Olas is a luxury boutique condo
hotel in Ft. Lauderdale with just 95 units, all overlooking
the ocean.
Beaches, casinos, golf courses and
theme parks are key lures. As more destinations create
ways to attract visitors, we will see more condo hotel
locations cropping up around the U.S. and the world.
Raising
the Bar on Amenities
Developers continue to try to enhance their offerings
to attract potential unit owners and guests. In addition
to designer furnishings and custom finishes in units,
we're seeing upscale amenities like brand-name spas,
on-site casinos, and fine-dining restaurants. The
four- and five-star condo hotels want to create an
experience for the guest, one that will keep them
coming back year after year.
One amenity that we're suddenly seeing
more of is indoor waterparks, which are costly to
build and operate but do a magnificent job of keeping
rooms filled year-round. As examples, there will be
one at The
Summit at Grand Sierra Resort in Reno,
Nevada and also at a property that just came on the
market last week, The
Image Hotel & Conference Center
in Pigeon Forge, Tennessee.
The
Summit at Grand Sierra Resort, Reno
NV, will feature an indoor waterpark and casino to
attract a mix of families, travelers, conventioneers
and gaming enthusiasts.
The
Health of the Condo Hotel Market
Although there has been a general softening of the
real estate market, most condo hotels continue to
thrive. Remember, these are not primary residences.
These are second and in some cases third homes for
people. They are purchased by investors with discretionary
income who want a vacation home and also a way to
diversify their investments.
Also, while Americans may be moaning
about the real estate market in the U.S., the flow
of foreign money has not slowed. For many investors,
the opportunity to own property in the U.S. combined
with a favorable exchange rate is enticing and affordable.
What's
in a Brand?
With an established brand you get worldwide name recognition
and immense marketing budgets, while the management
company ensures a high level of service and quality,
making it easier to sell the unit in the future. Plus,
buyers know they're likely to see better long-term
appreciation from well-established brands.
Having said that, the undisputed brand
leader these days is Trump. Putting the Trump name
on a resort virtually guarantees a fast sellout. We've
become so enamored with the Trump brand ourselves,
we've even built a whole website around the Donald's
properties, www.TrumpCondoHotels.com.
Other luxury
brands that continue to garner favor from buyers are
W, Mandarin Oriental, Starwood's St. Regis, Marriott's
Ritz-Carlton, Hyatt and Hilton.
More
Developers Jumping In
For developers, a condotel offers numerous advantages.
And that's why we're seeing more developers jump on
the condo hotel bandwagon. Hotel units sold before
construction generate revenue for the developer and
help lenders feel more secure about their investment.
Lenders usually finance condo hotels
with only 20% equity due to pre-construction sales.
Otherwise they want 40%.
Developers are also aware that condos
serviced by a four- or five-star hotel will sell at
a premium above similar luxury condos nearby. On average,
a hotel condo can be sold for 20% to 30% more than
a regular condo. Why? As one developer explained,
"We're not just selling condos. We're selling
a lifestyle to affluent baby boomers, people who want
first-class service and luxury accommodations and
have the ability to pay for it."
Increased
Finance Options
Condo hotel buyers can more easily find financing
now than a year or two ago. More lenders and mortgage
brokers are getting in on the condo hotel action,
offering diverse finance options and favorable terms.
Typically, what we're seeing is 80%
loan-to-value (LTV) mortgages to U.S. investors and
70% LTV mortgages available to foreign buyers.
Hot Markets,
Hot Properties
- Orlando
- In the U.S., Orlando is one of the hottest areas.
Even though it has experienced a slight slowdown
in condo hotel sales, more projects are set to launch
in 2007 than in any other city in the country.
Lighthouse
Key Resort in Orlando is a fractional
offering four weeks of use per year. Prices start
at just $37,100.
Unique to this market is a combination
of conversions of existing hotels into condo hotels
as well as new construction. Also unique is the
range of properties. There are budget-priced condo
hotel units on up to five-star properties. There
are also some extremely affordable fractionals,
such as Lighthouse Key with prices ranging from
$37,100 to $82,300 which provide for one month of
usage per year.
Overall, prices are more affordable in this part
of Florida than in say Miami or Ft. Lauderdale,
and you do get significantly more square footage
for your money.
- Las Vegas
- This amazing city keeps reinventing itself. Now
it is leading the hospitality market in upscale
condo hotels. We're talking glitzy, four- and five-star
properties operated by the biggest franchises in
the world.
Pretty much anything on, near, or in any way connected
with the Las Vegas Strip has terrific appeal to
buyers. Our most popular property this past year
was the W
Las Vegas Hotel & Casino. Those units
seemed to fly off the shelves.
The
W Las Vegas Hotel, a $2.5 billion Starwood
resort, sold out with lightning speed in 2006.
At this time all available inventory
in the W Las Vegas has been sold. The average sales
price was north of $1,200 per square foot. If you
did better than that by getting in at the extremely
favorable pre-release prices offered through Condo
Hotel Center, you should feel very good about your
investment. Construction is slated to begin mid-2007
with opening in early 2010.
We expect the hottest condo hotel property in Las
Vegas for 2007 will be Vdara.
With 1,543 units, it is the only condo hotel to
be part of the MGM Mirage CityCenter.
Years in the planning stages, CityCenter
will be a $7 billion mixed-use resort spanning 66
acres with 1/4 mile of frontage on the Las Vegas
Strip. It will feature a variety of upscale hotels
and residential options, a 250,000 sq. ft. casino,
and a 500,000 sq. ft. retail, entertainment and
dining district. It will redefine the Las Vegas
skyline.
Vdara
condo hotel will be part
of CityCenter, a $7 billion, 66 acre, mega-resort
to be built on the Las Vegas Strip.
- Myrtle
Beach, South Carolina - This family-favorite
destination has numerous condo hotels and more coming.
In 2006 we introduced New
Oasis at Sea Mist Resort. Offering
one-, two- and three-bedroom condos with prices
starting in the mid $200,000s, this property with
its abundant amenities and panoramic ocean views,
was one of our most widely requested.
New
Oasis at Sea Mist Resort offers affordable
condo hotel units on Myrtle Beach's famous Grand Strand.
- California
- We are finally starting to see some California
properties come on the market. The first of these
is La
Costa Resort Villas, the expansion
of a very well-known existing hotel in Carlsbad,
near San Diego.
These condo hotel villas are being
added to the legendary La Costa Resort, California,
as part of a $150 million expansion.
- Hawaii
- Hawaii is always very much in demand but has limited
inventory. As most of you now know, in November
the Trump Waikiki had a world record $700 million
one-day sell-out as there were over 1,600 reservations
for less than 400 condo hotel units.
Currently, we have available in Hawaii the Konea
Tower at Honua Kai, a four-star Intrawest
condo hotel located on one of Maui's most spectacular
beaches.
Konea
Tower, an Intrawest resort in Maui,
will feature amazing waterslides and waterfalls in
its pool area.
- Mexico
- Numerous condo hotels are under development in
Mexico, the most notable being The
Trump Ocean Resort Baja Mexico.
It was officially released on December 8, 2006,
and buyers, many of them from Condo Hotel Center,
purchased more than $122 million of its condo hotel
residences. That set a one-day real estate sales
record for the country.
Just a few select units are still
available in Phase I of Trump Baja. (Contact
us asap if you're interested.)
Phase II should come on the market sometime in
the first half of 2007, and yes, prices will be
higher.
- Caribbean
- We are getting more buyers and many more developers
contacting us regarding Caribbean island resorts.
In fact, we expect the Caribbean to soon become
the third largest region of condo hotel development
after Florida and Las Vegas.
Ginn
sur Mer will span 2,000 acres on Grand
Bahama Island. A $4.9 billion project, it will raise
the bar for Caribbean resorts.
The condo hotel available in early
2007 that will be the biggest and will therefore
have the most impact will be Ginn
sur Mer on Grand Bahama Island, just
a 25 minute flight from Palm Beach, Florida. It
will take 10 years to develop, cost over $4.9 billion,
and span over 2,000 acres.
In addition to incredible amenities
like Arnold Palmer and Jack Nicklaus signature golf
courses and a 55,000 sq. ft. casino, the largest
in the Caribbean, Ginn sur Mer will have 1,400 home
sites and 4,500 condo hotel units. It will change
the face of the Caribbean and raise the bar for
all Caribbean resorts. We like this resort so much,
we've even built a whole website around it. Visit
www.CondoHotelsBahamas.com.
Other Caribbean locales that are heating up are
Costa Rica, Belize, Cayman Islands, Jamaica and
especially, the Dominican Republic. Consider the
five-star Alta
Bella Fishing Lodge condo hotel at
Cap Cana, a 30,000-acre Dominican resort with six
miles of oceanfront.
Fishing
Lodge will be the centerpiece of Cap
Cana, a 30,000-acre oceanfront resort in the Dominican
Republic .
Also very popular is Panama. The
world is realizing that not only does Panama welcome
foreign investors with open arms, but you can get
a lot for your money. An oceanfront second home
or retirement home in Panama is ultra-luxurious,
spacious and, best of all, extremely affordable.
Creating the biggest stir in Panama is the $260
million Trump
Ocean Club, International Hotel & Tower
with 350 condo hotel units and an additional 600
condominium units.
Trump
Ocean Club Panama offers the opportunity
to own an oceanfront Trump property at prices in the
mid $300,000s.
- Dubai
- We continue to see tremendous condo hotel activity
in Dubai. Because prices are extremely favorable,
the area is experiencing incredible economic growth,
and since many of the condo hotel properties come
with guaranteed annual returns, something you don't
see in the U.S., our Dubai offerings continue to
be extremely popular.
Currently, The Cube is our most favored property.
But you can learn more about all of our Dubai properties
here, www.CondoHotelsDubai.com.
The
Cube located in Dubai's exciting Sport
City will overlook a lake, garden waterfalls and the
city's many sports arenas.
- Other International
Locales - We hear of numerous
European condo hotels in the planning stages as
well as some in Thailand, India and China. We've
just added to our website our first property in
Spain, the Maritim
Beach Resort & Suites, and our
first Morocco condo hotel, the Port
Lixus.
The
Port Lixus in Morocco will be a five-star
resort with two golf courses, a spa and more. Prices
start at just $149,000.
We at Condo Hotel Center will continue
to monitor the foreign markets and hope to be adding
more of these international offerings to our inventory
in 2007.
The Future Looks
Bright
Condo hotels are proven. The concept is sound. When
well-planned and well-executed, they produce a win-win
situation for buyers, developers and the communities
in which they're built.
Condo hotels will continue to evolve
and improve. Despite the current softening of the
real estate market at large, condo hotels are here
to stay, and we believe they represent the future
of upscale second homes for generations to come.
Happy Holidays
Well, now you have an idea of what we at Condo Hotel
Center see as the current state of the condo hotel
market. We welcome your questions and your input.
We also want to take this opportunity
to extend our gratitude to those who have referred
friends, family and associates to our website and
our services as buyer brokers.
Thank you to all of you, our faithful
Property Alert readers. In the coming year, we look
forward to serving as your primary condo hotel information
source. We hope you find our Alerts helpful in making
educated buying decisions (feel free to encourage
friends to subscribe),
and that you will choose Condo Hotel Center for assistance
with all of your condo hotel purchases.
From all of us here at Condo Hotel
Center, we extend best wishes to you for happy holidays
and a healthy and prosperous new year.
Joel Greene, Broker-Associate
Condo Hotel Center
A division of Sheldon Greene & Assoc., Inc.
Licensed Real Estate Broker
13499 Biscayne Blvd. Ste. 210
N. Miami, FL 33181
PH: 305-944-3090
FX: 305-948-0460
Info@CondoHotelCenter.com
www.CondoHotelCenter.com
www.CondoHotelsDubai.com
www.TrumpCondoHotels.com
www.CondoHotelsBahamas.com
* Copyright infringement is taken
seriously by Condo Hotel Center and will be prosecuted.
© Copyright 2006 Condo Hotel Center.
* All rights reserved. No portion
of this Property Alert may be reproduced, exhibited
or distributed without the express written permission
of Condo Hotel Center. Although Condo Hotel Center
believes the information contained in this Property
Alert to be accurate and complete, Condo Hotel Center
can make no such guarantee.
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