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 obviously professionals in the rental management business and therefore able to generate higher than average returns for investors. As such, hotel-managed condos are ideal options if you are looking to buying rental property in Thailand.
Hotel-managed condos are perfect investments 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 upon completion, and that’s a trend likely to continue.
The hotel managed investment offered to buyers tends to feature:
The guaranteed rental 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. Rather than asking investors to suffer in this establishment phase, the hotel brands instead offer an attractive guaranteed return for investors.
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 the developments are 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 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 blocked out periods such as peak season over Christmas and the New Year period.
When considering investing in a hotel-managed condo we would encourage investors to look beyond the initial guaranteed returns offer and study the longer-term prospects closely, 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 a knock-on effect on price.
During a market downturn when perhaps only 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 to make sure facilities are maintained to a high hotel level standard as the years go by.
In short, hotel-managed condos in Phuket are excellent investment opportunities, as you’ll earn handsome rental returns for minimal headaches.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full and managed with reasonable care, it is about the safest investment in the world.”
- Franklin D Roosevelt