Property buyers are buying apartments in a hotel, then leasing it back to the hotel for a good monthly return, according to development consultant Wayne Troughton, managing director of HTI Consulting
One example is Romney Park Luxury Apartments, previously a five-star, all-suite hotel in Green Point. It now sells fully furnished apartments that are leased back to an on-site hospitality management company, The Stay Collection, to operate as a self-contained hotel.
“Owners of the apartments have been seeing average occupancy rates of around 77% with monthly revenues ranging from R34 000 to R42 000, according to Heino Reuling, director of The Stay Collection.
During the 21 years Romney Park traded as a five-star hotel it built an enviable repeat-guest client base, which has been a big attraction for buying our apartments he said..
South Africa’s highest concentration of serviced apartment-style hotel developments is in Cape Town. Several new aparthotel developments entered the Cape Town scene in recent years, including The Protea North Wharf, Capital Mirage, Onyx, Radisson Blu Hotel and Residences, and Harbour Bridge Hotel & Suites. The Marriott Residence Inn, which forms part of the highly anticipated Harbour Arch development on the Foreshore, will start trading once the development is completed.
Buyers wanting to invest in aparthotel developments should ask themselves:
- Is the property well located?”
- Is it well priced?”
- How intricate and sound is the lease agreement between the property owner and the hotel/hospitality management company?”
- Is the property close to transport links and the area’s attractions and amenities?”
- Is the projected return feasible and based on a proven history?
- What service costs and maintenance does it include?”
