PROPERTY investors who want to diversify their portfolios should check out some hotel villas, especially those in places they like visiting.
More resort or hotel operators are putting up some of their properties for sale and leaseback to raise cash.
This means buyers can invest in a hotel room or a standalone villa for a possibly guaranteed return when they lease it back to the hotel owner.
They also have free use of the villa or room for a predetermined number of days a year.
‘It is an investment that gives you the added benefit of the resort lifestyle,’ said Mr Ku Swee Yong of Savills Singapore. ‘It’s still a relatively new concept and some investors will be waiting to see if it will take off in a big way before coming in.’
Home-grown resort operator Banyan Tree recently launched its Banyan Tree Residences scheme, which offers properties in Phuket, Bintan, Bangkok, Seychelles and Lijiang in China for sale. Prices start from $440US,000 ($638S,480) for a villa in Bintan and from $1US.5 million for one in Phuket or Seychelles.
Investors can choose to receive a fixed gross return of 6 per cent of the price for six years or one-third of the net room revenue for six years. They also have an option to renew it.
Local interest seems high. Banyan Tree said about 600 people visited its Banyan Tree Residences exhibition last weekend and 40 units - mostly villas in Bintan and Phuket - had been reserved for sale.
Potential buyers are given time to check out the actual properties before committing to a purchase.
Mr Richard Skene, assistant vice-president (property) of Banyan Tree Residences, said the number of units reserved in Singapore exceeded the combined reservations gathered from previous exhibitions in Hong Kong, Shanghai, London and Moscow.
Banyan Tree Residences has six Singaporean owners who have a total of 10 residences in Phuket, Lijiang and Seychelles.
A 46-year-old Singaporean lawyer said he bought his Phuket villa for the lifestyle benefits. It is more ‘worthwhile’ to invest in a villa with regular returns than to pay for a hotel room and not get any money back, he said.
Mr Skene said: ‘It’s a growing trend that started in the United States with condotels. It’s the same principle, and we are the pioneers in Asia.’ Condotels are residential apartments leased out on a short-term basis,
Banyan Tree started selling its resort properties about 10 years ago, but it launched the Banyan Tree branded properties only this year.
More of such resort or hotel properties with units for sale are now on the market, including St Regis Resort & Residences in Bali, and Karma Resorts, which has outlets in places such as Margaret River in Western Australia, Kandara in Bali and Koh Samui in Thailand.
On Friday, Puravarna Group launched another phase of its villas at Puravarna Phuket, which will open next November.
It started selling the villas last year, and more than 30 buyers from Singapore have paid at least $1.9 million each for a property. They will get an average return of 8 per cent for 12 years and free use of the property for 30 days a year.
‘Most buyers are bankers or property investors,’ said Puravarna’s regional director, Ms Christina Liang, adding that the firm offers financing of up to 90 per cent.
At Banyan Tree, owners are entitled to use their residence for up to 60 days a year, and there is no management charge during the rental programme.
But forget about personalising your villa and it may not be that easy to sell unless values soar. Also, financing is not a given.
In addition, there may be black-out periods. If you opt for the 6 per cent guaranteed returns at Banyan Tree, for example, you cannot stay at your villa during the Christmas and New Year periods.
Source : Straits Times - 25 Nov 2007