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Discounts on Pre-Construction Condo Hotel Units

Question

What is the average discount on pre-construction condo hotel units?

Joel's Response


It could be 5%, more or less. This may sound like I'm not answering your question exactly, but the fact is there is no way to know for sure. Here's why: If a condo hotel building sets a per unit price at a hypothetical $200,000 per unit, and it sells slowly for any number of reasons, the developer is not likely to change his price as time passes.

However, if strong demand causes the units to sell rapidly, then the developer will increase the price, sometimes several times before sell-out. The Mutiny in Coconut Grove, for instance, was the first condo hotel in South Florida. It was instantly so popular that they increased their sales prices 10 times during the sell-out period! Obviously, the people who bought early received the biggest pre-construction discount. Clearly, if sales are strong, it is reasonable to see prices increase. Thus, a delay in buying could be costly. In some instances, developers have let us know about impending increases to alert our buyers.

Developers may lower their prices when they get to their last few unsold units, but the discount they are offering is somewhat misleading as they are reducing their already previously inflated prices.

The above question was submitted via e-mail by a visitor to www.condohotelcenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.

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