Hotel-Condo Construction Surges
Luxury condos and hotels were hammered in the economic downturn. But good news for hotel and condominium developers- a resurgence is emerging.
The move is two-fold. According to the Wall Street Journal, markets previously overrun with unsold condos are beginning to dwindle in availability as cash-laden international buyers from South America, Asia, and elsewhere have shown a keen interest in the high-end luxury condo lifestyle. Developers have also become smarter about investing in condos, so as to avoid the problems faced in the downturn.
The condo/hotel lifestyle, known as branded residences, has long been a highly sought after luxury. Luxury hotel developers include condominiums for purchase in the structure. For an additional fee, owners, could pay for access to hotel services, such as room service.
The prestige of living on the penthouse level of a hotel is an amenity many buyers were willing to pay 20-30% over the market value for. However, during the recession, developers relied heavily on condos, building far more condos in these joint projects than hotel rooms, in hopes that condo sales would help pay the project’s construction debt. This approach backfired when the recession forced condo buyers out of the market and developers were left with a glut of empty, unsold condos.
Now it’s resurged, with a strategy. Developers aren’t as reliant on condos and are building more hotel rooms in their plans. In addition, developers are only focusing in top markets, such as Miami, Florida’s ultra-hip South Beach, New York City’s Manhattan borough, and other major U.S. cities popular with international buyers.
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