Investment Opportunities in Condotels

The purchasers are hotel-condo investors, a real estate product that combines the flexibility of condo ownership with a hotel setting. Popular in the United States, Europe, and the Middle East, hotel-condos have only recently begun to appear in the Philippines.

Hotel-condo units are both investment and residential units that can be used by their owners for up to 30 days per year, as opposed to basic condominiums, whose owners can use them as they please. The benefit is that proprietors can invest in real estate while having access to hotel amenities such as a spa, fitness center, and room service. The remainder of the time, the proprietors return the rooms to a hotel-managed rental pool. As units are rented, the proprietors receive a portion of the rental income. Alternately, unit proprietors may choose to reside permanently in their suites and enjoy hotel living 365 days per year.

Lancaster Suites: The Atrium will be the name of a recently disclosed project by Pacific Concord Properties Inc., one of the first developers to construct a hotel-condo in Metro Manila, to construct a 42-story twin high-rise on Shaw Boulevard.

The Lancaster Atrium is a twin tower development that shares a podium with the hotel-condo Lancaster Suites Tower I, which was leased out in less than 18 months and is a component of the hotel-condo program.

Beth Collingz, director of marketing for PLC International Marketing Networks, which exclusively markets the Lancaster Suites and Lancaster Suites-TThe Atrium Hotel Condominiums in Metro Manila, stated that condotels began to appear on the market after PCPI's 2004 launch of the Lancaster Suites. We observe a significant increase in interest from European purchasers and corporations seeking to invest in Philippine real estate. There have been a multitude of residential properties introduced to the market, but there have not been many Condo Hotel developments because, on the current Philippine real estate market, nobody felt the need to test a product that had never been tried in the country."

The market for investment properties has shifted in part as a result of a surge in demand for hotel accommodations in Metro Manila and a decline in the international value of the dollar. On a larger scale, baby boomers are retiring and purchasing second and third homes, and interest in real estate as an investment remains strong.

However, when it comes to the market for hotel-condos, the Lancaster project is attracting international clients who are familiar with this type of investment opportunity. According to Collingz, The Lancaster Atrium Tower A will feature 450 hotel-condo rooms and suites, a spa, a swimming pool, a business center, its own mini mall, shops and convenience stores, as well as several restaurants. The project, which shares a podium with Lancaster Suites Tower I and is located only one block from the Ortigas Center, Shangri-La Mall, Edsa Plaza Hotel, and SM Mega Mall, will continue superstructure construction this year, having already completed foundation work and installed five levels of underground parking.

While it is possible to obtain easy, no-prequalification, no-down-payment, 6-year, no-interest payment plans for the Lancaster Atrium suites, Collingz stated that the majority of buyers purchase these properties with a small down payment of approximately 30% to reduce the monthly payments to approximately $400 per month for a Studio unit, or with a 20% discount for outright cash purchases.

It comes as no surprise that the hotel-condo investment trend in the Philippines will accelerate, from Metro Manila to other major metropolitan centers like Cebu. The Lancaster Cebu development by PCPI is completely leased out, and Condotel operations will begin in March.

PCPI has designated Lancaster Hotels, Land, and Properties, Inc. (LHLPI) to administer the condotel's operations, sales and marketing, and assets. LHLPI will oversee the administration of the condotel and the entire condominium building, with the clear objective of maximizing profitability.

Statistics from the Department of Tourism indicate that over the past three years, the number of tourists visiting the Philippines has consistently increased by double-digit percentages. In 2005, 1.7 million of the 2.3 million visitor arrivals were in Cebu. In fact, an additional 40,000 hotel rooms are required by 2010 to facilitate the anticipated five million tourists.

We are more confident that our market and financial projections will be met as a result of the Lancaster brand of Condotel developments validating the rising demand for hotel accommodations.

More information about Lancaster Condotels in the Philippines is available on the company's website.