ALFA Resort Insight: Vacation Homes

Vacation homes can pay for your holiday

In several reports released recently, it has been established that vacations are good for you! No surprise there. This is especially relevant when we see that the number of days we take for vacation per year is decreasing significantly. With the long-hour work ethos prevalent in Asia, it is more important for people to take holidays that emphasise relaxation and pampering in order to recharge their body and mind.

Resort-based vacations are becoming more popular with tropical island breaks the ideal dream destination for an increasing number of deskbound workers. According to Knight Frank’s 2015 The Island Review survey, the need for escapism and privacy are key common denominators and this motivation will only increase as island destinations open up.

By 2050, 64 percent of the world’s population is forecast to be living in urban areas according to the United Nations. Asian interest in second home ‘lifestyle’ purchases will strengthen in the next five years but there will still be a desire to generate an income from their acquisition via a commercial enterprise such as a holiday let or small vineyard etc. Many resort-based investments allow for limited or long-term stays with the remaining days rented out or used as part of a resort hotel portfolio with income returns guaranteed.

Interest is likely to be focussed within Asia Pacific initially. Accessibility and new transport routes will be critical in determining where future demand is strongest. Commutable islands, those within 2-3 hours of a city hub and with year-round flight availability will outperform; London to The Balearics, New York to Florida, Singapore to Bali.

The world is shrinking due to improved transport links allowing new markets to open up such as Boracay in the Philippines. Exclusive data from NetJets for Knight Frank confirms there has been a 69% increase in private jet flights to island destinations in the last ten years. However, established resort islands as opposed to private islands are driving the majority of this growth.

Buyers appear increasingly attracted to tight planning restrictions, and even some outright building moratoriums, allowing them the confidence to buy properties that comply with strict building codes and environmental initiatives which is making an island property in many locations an increasingly rare commodity. With the many unscrupulous developments sprouting up throughout Asia, it is important that buyers are confident that the developer they work with has complete bona fides and a strong track record in building quality residences.

Established resort operators, offering upper-mid to high-end apartments and villas with full service facilities are attracting a growing number of investors from Asia. ALFA Investors is working with two such resort operators, Absolute Twin Sands Resort and Spa in Phuket, Thailand and Aqua Boracay by YOO, in the Philippines.

Phuket is an established destination for investment and lifestyle investors and with new direct air routes opening up introducing an additional source of potential renters, guests and investors, the island still has a great deal to offer potential resort property investors. With apartments at Twin Sands starting from just US$138,000 with guaranteed rental returns and in some phases a buy back option after 6 years plus spa, pools, restaurants and two fabulous beaches this offers buyers excellent returns as well as a desirable, award-winning vacation home.

The Philippines is an emerging market for resort investors with one of the strongest economic growth potentials in the region. The idyllic island of Boracay has been consistently voted best island destination, best beaches and party island in international polls. Aqua Boracay by YOO is designed managed by YOO Hotels and Resorts, co-founded by Philippe Starck and will be the newest luxury resort to open on the island when completed in 2016.

There is a severe shortage of luxury accommodation on the island and with the airport extension nearing completion there will be a high demand for full service apartments at this level of sophistication. 5-star designer apartments with designer furnishings start from US$234,000 with a 631 square metre Penthouse with private pool deck at US$3.99m. All apartments will be rented out as part of the hotel operations and offers up to 30 days complimentary stay per year for owners, their families and friends. The returns are guaranteed at 6 percent for the first 2 years of operations. And this rental guarantee is uncapped which means it can go up but not below percent.

These are just two excellent resort properties in the ALFA Investors portfolio. Whilst we have known for a long time that most owners actually take the time to use their resort properties, it is becoming progressively accepted that the benefits and gains of owning a holiday home far outweighs the price paid for a vacation. The impact that leisure time has on lifestyle, productivity and health are starting to be accepted as an essential component of our well-being.

Tony Smyth is Head of Marketing at ALFA Investors Ltd, a luxury resort and city property specialist based in Hong Kong. He can be contacted at tony@alfainvestors.com or +852 2110 8712. Or visit the website: www.alfainvestors.com