Condo hotels could work here

Imagine owning a Singapore hotel room where you could stay during holidays, and collect rent the rest of the time.

A property industry figure said yesterday that Singapore’s hospitality sector, which is expected to grow, could support the development of this market - known as condominium hotels.

Mr Gurjit Singh, the director of property at Sentosa Leisure Group, said this concept could work in strong tourist spots here. He was speaking at a conference held alongside the Cityscape Asia exhibition of global property investment and development projects.

A condominium hotel is a strata-titled hotel unit that is sold to individual investors. This concept has already taken off in places such as the United States, Europe, Dubai and the Philippines.

At Waikiki in Honolulu, 464 units at Trump International Hotel and Tower were snapped up in one day late last year. Sales topped US$700 million (S$1.06 billion), with buyers said to pay an average of US$1.5 million for each unit.

If condominium hotels are built here, it would help speed up the provision of hotel accommodation, Mr Singh said, and be a catalyst for urban regeneration.

This approach would provide developers with upfront capital, as hotels have very long gestation and payback periods.

Investors would get a a low price entry point into the hospitality sector.

‘It can provide another form of property investment for retail investors,’ said Mr Nicholas Mak of Knight Frank.

Returns would be split 50:50 between the hotel manager and the owners, after deducting expenses.

‘Singapore needs to think through the alternative ownership structure,’ said Mr Singh.

There would be legal, taxation and zoning issues, for example.

Source : Straits Times - 12 Apr 2007