......Whenever a developer talks about guaranteed rental returns, I hear alarm bells. True rental guarantees – that accurately reflect the market – are rare. So rare, that I think of them as a unique type of programme for savvy investors – it only applies to resort properties where the rental return is tied to hotel accommodation as opposed to a condominium or house that has to compete on an ever-increasing basis as more completed units hit the rental market.
I know of only one programme like this in Thailand, which is the opportunity I’m writing about here, writes Scott Malone.
Real guarantees offered at a retail level are difficult to find. The good deals are traditionally taken up by funds and high net-worth individuals. This is due to the strong and guaranteed return with the upside potential of capital appreciation.
The chance to get in on one such deal with special pricing and terms is available now with The Beaches Resort & Residences. This deal guarantees a fixed net rental yield of six per cent per annum for the first five years of operations. This is paid by the resort operator/developer, Pacific Shore Developments. Early-in pricing offers the potential for very strong capital appreciation.
Offer number two currently available to the quick-off-the-mark investor is as follows:
1 Pay the initial deposit of 40 per cent and receive a guaranteed return/discount of five per cent per annum on the sum invested.
Unit price 40% deposit ROI PA ROI PA 5 Years Balance
(adjusted)
10.9m 4.36m 5% 218,000 1.09m 5.45m
2 Pay the initial deposit of 60 per cent and receive a guaranteed return/discount of six per cent per annum on the sum invested.
Unit price 60% deposit ROI PA ROI PA 5 Years Balance
(adjusted)
10.9m 6.54m 6% 392,400 1.962m 2.398m
The Resort
Resort properties have been excellent investment vehicles for the past 30 years and generally large investments have been taken up by institutional investors who look at the long term returns on their investments. With the launch of The Beaches Resort & Residences at Bang Saray the opportunity to invest in resort units has been made available to all investors, large and small alike.
The concept is different from buying a condominium or house due to the exceptionally high levels of investment into the facilities available to owners as well as the expense of these infrastructures. The Beaches Resort features two water parks, three lagoon pools, a kilometre-long boardwalk consisting of themed restaurants, cafés, nightclubs and boutiques from all around the world, a conference centre, a fisherman’s village and a wellness centre (partnered with Bumrungrad Hospital), Family Entertainment Centre and much more.
Virtually all these features are available to the owners and guests of the resort at no extra charge or discounted rates to members and owners.
Each property will be run as a hotel and therefore all the services that go with this are at the disposal of the owners/guests. Each hotel will have a separate operator (names such as Hyatt, JW Marriott, and Four Seasons are being currently considered among many others) which means that the global marketing strengths of these brands will assist with driving occupancy levels.
In addition to the guaranteed rental return of six per cent of your investment for the first five years, the owner has the use of their unit for 30 days per year, a bit like having your cake and eating it!
It boasts all the amenities you could expect from a resort of this quality and size. The selection of golf courses in the region tops 20+ international standard courses with the nearby - closest golf course – less than 7 kms away – Phoenix Golf & Country Club with 27-holes of magnificent golf.
The Beaches Resort & Residences will boast in excess of 2,400 rooms with not one, but two, water parks!
The developer
The Beaches Resort & Residences is owned by one of the region’s most successful developers, Liakat Dhanji, CEO and founder of Pacific Shore Developments, with 60+ successful global, five-star quality projects to his name.
Liakat Dhanji, spotted this opportunity three years ago when he immediately bought the land and embarked upon the concept and design of the Beaches Resort & Residences. He has planned the concept around some of the top tourist spots in the world –
St Tropez, Puerto Banus and Rio de Janeiro – as well as competing with such regional attractions as Disney Hong Kong and Sentosa Island Resorts in Singapore.
The price
In the region the project in terms of luxurious accommodation is on par and competing with such properties as the St Regis, Singapore, which launched in 2007 achieving the highest-ever selling price for luxury property in the island state at Sing $31,500 (US $20,475 – Bt 716,625) per sqm.
The Beaches Resort & Residences can be bought for a fraction of these prices with units starting from Bt 163,905 (US $4,683) per sqm or less than a quarter of the price of the Singapore luxury property. There is nothing to compare in quality, scope or facilities within Thailand with the possible exception of Laguna Phuket. Grade ‘A’ condominiums, like Raimon Land’s Northpoint (Pattaya’s benchmark property to date) has achieved Bt160,000 plus per sqm without furniture, water park or anywhere close to the amenities available at The Beaches.
The misconception is that The Beaches Resort & Residences prices are out of the reach of the condominium buyers currently purchasing in Pattaya. In fact, when you compare facilities, The Beaches offers greater value and opportunity for enormous capital appreciation, second to none.
No condominium in Thailand can boast amenities of such quality and abundance such as those on offer at The Beaches Resort & Residences with its two water parks; wave pools; surf pools; three lagoons with man-made pure-white sand beaches surrounding each lagoon with private cabanas; wellness, longevity and fitness centre, Fisherman’s Village offering a glimpse at Siam of old with restaurants and stalls offering local produce from local people at local prices surrounded by a man-made Mangrove Water Garden; more than 20 international restaurants, cafés, bars and nightclubs located on the more than one kilometre boardwalk/promenade where street entertainers will contribute to the ambience; conference centre with its very own hotel, family entertainment centre with movie theatre, bowling alley, computer gaming rooms, laser-gaming adventure centre; Maldives Water Villas and four five-star quality hotels and residences.
Phase 1 will be delivered in three years from commencement of construction which is scheduled for Q3, 2009. The Beaches is currently selling Phase 1 units in The Delano and St Tropez Apart-Hotels. Prices in the Delano start from Bt 6.9m for a 36 sqm suite and the St Tropez starts at Bt 10.9m for the 65 sqm suites. At prices from Bt 163,905 per square metre these units are “priced to sell”. When you realise that the units are delivered fully-furnished (freestanding furniture, decorations, wall paintings, etc) and hotel room ready (linen, cutlery, crockery, glassware, etc) the price looks even more attractive.
Rental yield
Any way you look at it, the investment opportunity has to be the best on offer at this time. This is without even considering capital appreciation which for water park developments has always been significant. In addition, hotel properties with water parks attached achieve uplift in occupancy by 25 per cent and room rate increases of more than 50 per cent. This adds consistency from their investment for investors looking for increased yields.
You should base your yield numbers on total outlay. I point out this as many developers present rental yields based on unit price net of fit-out. You need to make sure you are making a like-for-like comparison when analysing a deal.
The deal
Developers like Pacific Shore Developments will raise prices as they move from phase to phase. In fact they raise prices once they achieve a certain level of sales within a phase. Early sales secure the project for the developer; the cream comes at the end.
I expect prices to continue rising to substantially higher levels than the current Phase 1 prices as time goes on, especially when comparing prices with global resort properties which are more than four times The Beaches prices. Ω
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