4 Reasons Why Thailand Has Emerged as the Investment Destination for Hotel Managed Residences
Hotel Managed Residences are the apartments or residential buildings that are serviced and managed by branded hotels or hotel chains. With such a combination, there is a unique lifestyle concept, which provides a residential status with the amenities of a five-star hotel. The residents of such a residence have an exclusive range of facilities like a twenty-four-hour concierge, room service, and permissive luxury amenities while ensuring the privacy of their homes.
With time, the lifestyle of people across the world has changed a lot, and people started loving a luxury life. The change in lifestyle has played a crucial role in the development and expansion of branded residences. Properties are incorporating a residential facet in both metropolitan and urban areas. In today’s world, around 40% of the total hospitality portfolio has an association with the residential aspect.
Investors in any geographical region look for investment schemes that are hassle-free and can ensure more profit on their investment. As the change in lifestyle and conditions in hospitality have enforced people to live a luxury life, so the investors have found hotel managed residences as the best choice for investment. Thailand also influences the changes in lifestyle that occurred across the world. Apart from being a holiday destination, Thailand has more that have made it as the investment destination for hotel managed residences. Here are four reasons:
- Buyers perceptions – In general, buyers have to face a lot of problems when they decide to buy residential or commercial property. Their primary issues are with the management of the market and units (they have). They assume that the branded hotels or highly established hotel groups will efficiently and effectively manage and market their units. Further, they think that they would not have issues in having branded residences, as the respective hotel will handle everything on their behalf. The branded hotel will only sign a contract for the management of property if the quality is excellent. Investors assume that they have their share in the property, and the branded hotels would manage everything for the property.
- Thailand has world-class destinations – Thailand has two world-class destinations that are Phuket and Pattaya. Around 60% of the world population takes only 6 hours to reach these destinations. Phuket and Pattaya have direct air links with countries like China, India, Hong Kong, Singapore, Kuala Lumpur, Australia, Europe & UK, Russia, and the Middle East.
Known as the Pearl of the Andaman Sea, Phuket is one of the popular tourist destinations in Asia and the leading one in Thailand. Due to its crystal-clear water, sandy beaches, and party ambiance, Phuket draws travelers from all over the world. Being as the tourist hub in Thailand, Phuket has a large number of the hotel managed residences like The Residence and Wyndham Naiharn Beach Phuket at Sheraton Phuket Grand Bay Resort.
Pattaya has also played a vital role in making Thailand as the investment destination for hotel managed residences. Apart from Phuket, it draws tourists from each part of the globe around the year. From November to February, it has a large number of visitors, and this increases the demand for serviced apartments in Thailand.
- Guaranteed rental returns – Usually, investors want to have positive and excellent returns on what they invest, like branded residences. When buyers willing to invest, the hotel brands ensure a good return to them. They do so, as they know that a new hotel will take a couple of years to receive an average room rate and attain high occupancy. Instead of asking the investors to suffer in the initial stage, the hotel brands in Thailand provide a guaranteed return to the buyers of hotel managed residences. Further, the hotel brands ensure rental return based on the average room rate and the occupancy of the property after the completion of the initial time of guaranteed return. Furthermore, hotel brands offer the opportunity of renting branded residences themselves or living as a resident. As per the contract, developers rent around 70% of the units of branded apartments and allow the buyers to use the left part of the units for their living or renting.
- Government initiatives 2017 – The Thai government also has been supportive of investors. It amended the Investment Promotion Act BE 2520 (1997) by bringing the Investment Promotion Act BE 2560 in 2017. With this new legislation, foreigners along with locals (taxpayers and non-tax payers) have gotten a wide scope of incentives. For example, the government has revised import duties, which was higher earlier, of the materials that are used in R&D activity and testing. Further, the government has also pronounced the new National Competitiveness Enhancement Act for the selected industries like hospitality, tour & travel. B.E. 2560 (2017) is an investment promotion strategy for an extended period. It has become Thailand’s national agenda for investment-based transformation. The new investment law in Thailand eyes to increase the competitiveness among industries as per the country’s capabilities. Incentive-related laws are the same in the new act. However, it offers an exemption to industries from business income tax for around 15 years along with subsidy.
The reasons mentioned above are just some clues for a rise in the investment in hotel managed residences in Thailand. Investors need to be very careful while making any investment. They should do in-depth research about the location, design, and available amenities/specifications of the property. With this, they will be able to have desired/expected returns on their investment in branded residences. The investors should contact the hotel management company, which has the sound industry knowledge and can easily manage and market the property.