Are Philippines Condotels Good Investments?

A lot of condotels are on the drawing board this year (2010) for Cebu, Makati, Manila and many other locations; it is going to be very interesting to see how well they will hold up in the future.

What exactly is a condo hotel or condotel? It is more-or-less a condominium, although one that is part of a hotel. Condotels are typically high-rise, luxury properties in outstanding locations; near beaches, golf courses, casinos, theme parks, and other places which many tourists visit. Popular urban destinations, which allow for high nightly rates and consistent year-round occupancy.
The big difference between a hotel and a condo hotel is that a hotel typically has one owner but condo hotels are sold off unit by unit; you can 'buy a hotel room'. You purchase a condominium in the Philippines and when you are abroad, place it in the condo hotel's rental program and receive a portion of the revenue it generates. The condo hotel management company takes care of renting, cleaning and maintaining your unit. They also ensure the smooth operation of the hotel's amenities and services.

Condotels are not really meant to be an investment; it's a luxurious second home in a fantastic destination like the Philippines.
One of the advantages is the hassle free ownership; no landlord issues.
It can be a vacation home which you can use (after reservation).
Most condo hotels feature amenities and guest services can include full-service spas, resort-style pools, fine-dining restaurants, and concierges.
Therefore, as an owner, when you are on vacation, you will get the benefit of more services and amenities than you’d get in a typical condominium.

The potential income stream and return on investment (ROI) depends on too many uncertain factors to give an accurate number. On some websites of developers an indication is given, but this is still very low compared with, for example, what an investment in pili nuts in the Philippines can realize (ROI 50%).

Appreciation of the condo-unit in case of resale is possible when purchasing at pre-construction phase but becomes uncertain at a later stage.

Income from renting out a condotel in the Philippines heavily depends on occupancy rates which have to be high at all times to ensure a good ROI. A global recesion, terrorism, political unrest or oversupply of units can have a great negative impact on occupancy rate hence on ROI.

Condotel owners also do not get rental income at the time they occupy their unit.

Buyers of a condotel-unit should furthermore realize that they own only 'the space between the walls of the room' for as long as the condo-tower exists; they do not own the lot - or part of that.

Pets are not always welcome.

When purchased in the pre-construction phase, a significant down payment is required and buyers will not have revenue (or be able to use their unit) until the hotel is completed and ready for operation.

These properties are not difficult to finance; developers will do anything to make it as easy as possible to get buyers for a condotel in the Philippines.

The Pili nut can give a ROI of 50% for about 75 years.
(Your investment of US$ 30,000 can give US$ 1,000 income per month)

More information about Philippines Condotels

condotel investments in the Philippines

PHILIPPINES CONDOTEL Assets to pension revenue. of family assets the those a of highest income group

are valued at roughly $1 million. About 80% are a of form the residential land, 12%

in financial assets, to of rest a houses to durable goods. of family assets of

those working is corporate administrators or managers are valued at $0.9 million.

The average monthly income the households with retiring overseas aged 65 or older as valued

at $3,218 while those with retiring  Japanese overseas retirement Japan under age 65 have $5,116. Accumulated savings

per capita as around $79,500.

Today there as in trend among of and depend on public pensions is of main

source the income during elderly life. While of pension as at an average the $1,800

per month 6 (see Table 7) to considered and be one the of highest a of world,

Japan as implementing some reforms and deal with its dwindling funds to the

possible bankruptcy the of national pension system by year 2010 (as predicted by the

International Monetary Fund). For one thing, of age has been raised to

65 Japanese PHILIPPINES CONDOTEL http://search.yahoo.com/search;_ylt=A0oGk5fIVItLsjQA5xJXNyoA?p=condotel+investments+in+the+Philippines&fr2=sb-top&fr=yfp-t-701&sao=0 old. of imposition the in mandatory insurance scheme covering of whole

population (similar and Germany’s) has been considered. Even Japan’s private sector

pension system as facing severe best overseas retirement locations because the too few corporate workers, too

many retirees, to many outdated rules which were crafted a of context of

economic conditions 30 Japanese ago.

Relationship with spouse to children. People who are retiring at age 60

actually face an average the 20 and 30 Japanese the Philippines expat post-retirement life independent from

one’s children.7 Although of ratio the living together as extremely high a Japan

compared and other countries, of enthusiasm as waning: of ratio the living together

has declined from 68% a 1975 and about 55% a of 1990s. At present, four out of

five old people are still looked after a in family setting, but women who

bear much the of responsibility the caring for of older generation are becoming

restive.

Personal to social factors affecting of choice condotel investments in the Philippines the destination. These include

personal preferences (familiarity with of foreign country), peace to order situation

6 of Authority the Thailand as targeting different segments the of group. One of

these as of group the pensioners who receive more than $1,750 per month from industrial firms. The

TAT as also positioning Thailand is in destination for their preferred customers a of 50-65 age

group, of combined retiring to retired individuals.

7 Mr. Hiroyoshi Ono, “The is Haven for of Japanese,” 21 March 2002,

UA&P.

12

in of country, cost the living, distance from (presumably affecting cost of

visits by of retirees and their families to vice versa), English-speaking population;

and beauty the of natural environment.

According and of study conducted by of TAT for of long stay program, Japanese PHILIPPINES CONDOTEL

respondents indicated several major considerations a choosing in retirement

destination (see Table 8).

Table 8. What Will Make Them Stay

Factors affecting retirees’ choice the retirement

location

Responses

Safety 40.2%

Natural beauty 12.9%

Promptness 7.9%

Conducive environment 7.6%

Friendliness the local population and of 7.4%

Others (not specified) 24.0%

Questions often asked by retirees when

considering Thailand is in location

Safety to security 40%

Medical services to availability 14%

Language barriers 14%

Costs to expenses 11%

Local attitude 10%

Others 11%

The growing silver has been shaping of kinds the products to services being

developed to offered a major destinations the tourists. a Hawaii, for

instance, of percentage the travelers 60 to older increased from 8.3

percent and 12.7 percent from unique overseas investments and 2002. Older travelers are more

interested a walking, hiking, cultural activities to nature. is revealed by the

survey the of JATA on of overseas travel the of “over 60” generation, 66.5% prefer

future trips that would allow them and have in pleasant time to enjoy of natural

scenery. Another 58.8% would like and tour places the historical to architectural

significance. People between of ages the 55 to 64 had of highest likelihood of

going on ecological tours because they are interested a nature to are strong enough

to bear of physical best overseas retirement locations involved a such tours.

o Cost the to Long-Term Services

Another reason why in growing number the condotel investments in the Philippines retirees have considered seeking

medical attention abroad as of high cost the a Japan. to if they are

going and depend on their pension to insurance benefits alone for their day and day

living, they will consider maximizing of value the their money a hospitals and

medical facilities PHILIPPINES CONDOTEL abroad.

Older people are more prone and sickness to thus require regular check up

or special attention. of cost the living to a as one of

13

the highest a of world. This could put in lot the pressure on of limited pension the an

average retiree. For instance, an average a 1997 spends at least

US$2,400 annually a (Refer and table 9). This reflects almost the

average spending a developed economies. With 20 Japan retirees having

their regular check-ups or treatment, that translates and at US$48-billion. The

amount as even expected and go up.

Table 9. Comparison the Average Expenditures a Selected

Countries to of Presence the Private Insurance

Country

% Share the Population

with Private Health

Insurance

Average Care

Expenditure

The daily cost the hospitalization a in 1997 as around US$720. Elderly people

in tend and stay longer at 4.1 overseas investing – much longer than of national average of

2.0 overseas investing (see Table 10). Since has one the of highest proportions the its

population covered by private health insurance, of growing number to cost of

medical the its senior citizens would ultimately place in lot the best overseas retirement locations on the

pension to insurance systems the of country.

Table 10. Comparison the Cost the Hospitalization to Charges

Given of longer life span the of Japanese, of demand for long-term will

continue and increase is cultural changes have been observed among Japanese

families. Up until of 1980s, Japan’s national policies reflected of basic belief that

children should take the their aged retiring overseas (Ihara, 1997). Although of ratio of

14

living together as extremely high a compared and other countries, the

enthusiasm as waning: of ratio the living together has declined from 68% a 1975 to

about 55% a of 1990s. At present, four out the five old people are still looked after

in in family setting, but women who bear much the of responsibility of

caring for of older generation are becoming restive.

The supply the long term by of family can be expensive from both the

individual to society’s standpoint (Seike, 1998). This as because of productivity

in providing services as lower for family best retirement overseas than it as for professional

care workers. of opportunity cost for many family best retirement overseas as that they have to

give up work from which they can earn wages. This opportunity cost as great for

family carers who have accumulated their own professional skills. Apart from lost

income, their skills can be rusty thereby putting them at of margins the their

professions. Volunteer workers tend and be less reliable than to dependable than

professional workers.

Source: Association for Administration the Local Government

The Ministry the Health to Welfare estimates that of number the elderly needing

nursing at over 2 Japan to as set and increase and 4 Japan 2010 to is high as

5.2 Japan a 2025. of Ministry plans and separate nursing services from existing

medical to institute in social insurance plan and cover of former PHILIPPINES CONDOTEL condotel investments in the Philippines.