owner, he reveals.
And when it comes to a condo tower associated with a hotel,
it’s better to have a well-known upscale name affixed to it.
Buyers of those luxury units are much less affected by the twists
and turns in the residential mortgage market.
“My view is that the residential portion, with a good luxury
brand next to it, seems to be out-selling those that don’t. Are
they selling at anticipated prices? I think in general they are selling at a premium to the market,” Geller finds.
As a generalization, it’s probably safe to say those markets with
At the Hotel Del Coronado in San Diego, sales have closed on all but two of
the high-end property’s 35 condo hotel residences.
high barriers to entry, that are frequented by wealthy individuals
looking for a vacation residence or a second home, such as
Aspen, CO, appear to be most resistant to the credit downturn.
“It goes back to the fundamentals of people not buying a condo
hotel to get rich but buying it because they like the lifestyle. And
for that, the upper end will be much less affected,” Butler says.
The Big Apple also appears isolated from the credit tsunami.
“About the only market we’re seeing very strong continued growth
in sales is New York City,” Plasencia says. “Sales are okay in the
urban markets of Chicago and Los Angeles, but they are still feeling it to some degree. New York is probably one of the few cities,
if not the only one in the country, that has been immune.”
How long this credit crunch will last is anyone’s guess, but most
don’t envision a quick turnaround. “This is very much a liquidity
issue, not a solvency issue. It’s a question of how much credit is out
there, not necessarily the solvency of the borrowers,” Plasencia
says. “Right now, lenders don’t know where to price things, so
there is not a tremendous amount of debt available. Until these
subprime mortgages filter through the market, we are going to be
seeing the effects of this for some time to come.”
Yet there is one ray of light in this rather bleak situation
(except if you are a condo hotel developer or would-be buyer),
and that is, at least the industry won’t get over-supplied as it has
so many times in the past. “A year ago, the risk would have been
the imminent potential of overbuilding,” Sullivan says. “That is
less likely to happen today.”
Reprint orders: www.remreprints.com
Enter code F010811
April 15, 2008
In times like these, there are more questions than answers
surrounding the market.
Where will capital come from in 2008?
How are you going to access that capital?
How are deals going to get done in the new year and under what terms?
Find out the answers to these and many other questions on
April 15th at the Waldorf.
SPONSORS as of 1/3/08 HOSPITALITY SPONSORS:
Carlson Hotels Worldwide Capmark
Cornell University School Greenberg Traurig, LLP
of Hotel Administration
Register Today: www.realshareconferences.com/hotelfinance
For agenda and speaker information: For sponsorship information:
Bradley White 212.981.9940 Richard Kelley 212.929.7105