More Buyers Are Calling Hotels Home
Hoteliers in cities like New York and Miami are doubling down on creating residences to meet a boom in demand.
4 min
With the luxury real estate market continuing to roar even as the U.S. economy flirts with recession, eager home shoppers of means continue to snatch up inventory. Rather than wait years to build a home in the face of labour shortages and supply chain problems, many would-be buyers are looking to reliable builders of turnkey properties for immediate purchases.
New residential developments built by famous hoteliers such as St. Regis, Four Seasons or Ritz Carlton are seeing their listings snatched up. With the luxury travel world still recovering from a two-year pandemic slowdown, the minds behind these big-name destination properties see an opportunity.
Jon Paul Perez, president of the global residential developer Related Group, confirms that top hotel flags have placed a larger focus on their residential offerings in recent years. Still, he sees the extent of the homes over hotel rooms trend varying in different regions.
“It really comes down to the specific market,” Mr. Perez said. “In New York and Las Vegas, hospitality [within hotels] still reigns supreme. However, in Miami, we see a big shift toward a fully residential experience.”
Using the Miami market as an example, Mr. Perez explained that the last 18 months saw the Ritz Carlton, NoMad Hotels and St. Regis all investing in new developments without any hotel component at all. He believes the reach into more residential spaces is a result of brands working to offer more choice and flexibility to their customers.
According to sales materials for the Ritz Carlton Miami Residences, prices start at $1.5 million with Sky Villas selling for $15 million–$19 million, and penthouse units available for $24 million.
“Some consumers will prefer to save the hotel lifestyle for a special weekend or vacation, while others want to really immerse themselves and live it full-time,” he added.
While name-brand living spaces are always at a premium, Mr. Perez believes Covid-19 was a prime driver of the current high-end luxury development push.
“There’s no denying hospitality was hit hard at the start of the pandemic,” he said. “While travel has certainly returned, hotel companies have seen the residential market is a strong revenue driver.”
Hoteliers Adjusting Their Portfolios
Dana Jacobsohn is chief development officer for U.S. Luxury Brands and Global Mixed-Use for Marriott—the St. Regis Residences parent company. The company is always looking to grow its portfolio of hotels while planning residential spaces on a case-by-case basis, she said.
“For each deal, our team of in-house feasibility experts will assess a project to determine if a hotel is appropriate for that development,” Ms. Jacobsohn explained. “The team examines the site, the historic and potential market demand and the existing and anticipated supply of Marriott and competitive hotels in the area.”
Marriott currently has 17 operating projects globally that only include a branded residential component and more than 25 in the pipeline, according to Ms. Jacobsohn.
At the Four Seasons Hotels and Resorts, hotel rooms are not becoming more scarce in favor of more condominiums and related spaces; one is simply adding to the other, said Ricardo Suarez, who is senior vice president of development, Americas, at the brand.
“Our hotels are not necessarily becoming smaller,” Mr. Suarez said. “Residential continues to be a priority across our pipeline as we expand in new markets globally. It is not a case of reducing hotel keys to increase sellable residential area. Rather, it’s an evaluation of what’s right for the local market.”
The Four Seasons and their development partners closed more $10 billion worth of branded real estate over the last three decades, Mr. Suarez said. But its five-year plans include a pipeline of another $7 billion currently in the market or ready for launch. That accelerated growth follows close on the heels of a consumer shift toward more space, ensured amenities, comfort and safety.
“A direct result of this shift is the growth of our standalone residential business, including recently announced projects at Lake Austin [Texas] and Dubai—and recently opened developments in Los Angeles, San Francisco and Marrakech,” Mr. Suarez said. “We see increased demand for our residential offering as home buyers are showing unparalleled interest in owning and living a Four Seasons lifestyle.”
According to Four Seasons sales presentations, Lake Austin homes start at $4 million with Dubai offerings kicking off at $3 million.
Midway through 2022, an overwhelming majority of the Four Seasons pipeline has a residential component, according to Mr. Suarez.
“It takes a strategic, long-term vision and strong partnerships with development partners who can see beyond the immediate market and deliver the type of product and experience that will create something unique with enduring value,” he said. “Four Seasons has also expanded significantly into standalone residential properties with a number of our existing ownership groups adding pure residential offerings to their development portfolios.”
‘Pampered Living’
Ryan Melkonian is founder and managing partner of Manhattan-based Melkonian Capital, working with Mandarin Oriental on high-end home offerings. He believes hotel brands will continue to focus heavily on residential development as the pandemic caused people to evaluate how they spend their time at home and how they could improve their lifestyle.
“I believe you will see more hotels adding residences to their properties with the luxury real estate so hot right now,” Mr. Melkonian said. “More wealthy home buyers looking for a second or third home—or what we are calling co-primaries—will be enticed by the offerings of branded residences. This necessitated the need for more properties over keys.”
As with other developers looking to balance hotel demand against real estate revenue, Mr. Melkonian said his firm remains dependent on the location of the property and the need for luxury homes within that market.
Craig Studnicky, co-founder and CEO of the Miami-based International Sales Group, stressed that major hotel-branded residences will only grow in popularity as their name recognition separates them from off-brand or standalone projects.
“Whether it be the St. Regis, Four Seasons, Ritz Carlton or Waldorf Astoria, if I am purchasing within these projects, I am imagining pampered living curated by hoteliers who know how to make said pampered living consistent and reliable,” Mr. Studnicky said.
The choice for many property developers to lean into big name residential brands is a necessity, considering the soaring prices of lots, labor and building supplies, Mr. Studnicky said, pointing to Miami and Fort Lauderdale, Florida, as examples.
“In South Florida, land prices have never been higher and construction costs have never been higher,” he explained. “For developers to make economic sense with high-rise projects, they need to sell at the highest price per foot they can. The only way that can sell at that tier is with a 5-star hotel brand.”
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This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
You don’t need to be a golfer to enjoy the benefits of living adjacent to a golf course in Australia
3 min
From the Spring 2024 issue of Kanebridge Quarterly. Order your copy here.
W hile water views are usually considered most desirable for property buyers, golf course vistas are snapping at their proverbial heels. This past quarter century has witnessed a golden age in Australian golf course living, with dozens — if not hundreds— of residential courses built around our major cities and tourist towns. These days, there’s a buoyant market for established large golf homes alongside off-the-plan apartments being retro built to take advantage of existing golf course views. So what’s the appeal?
Green dreams
Barbara Wolveridge is a director at Sotheby’s International Realty. She has worked with many of Australia’s most prestigious golf course developments including The National in Cape Schanck Vic, Moonah Links on the Mornington Peninsula, Macquarie Links International Golf Club in Sydney’s West and the Mirage Country Club in Port Douglas where she currently lives. (She was also married to the late renowned golf course designer and former US Tour player Michael Wolveridge.)
“People like to live on golf courses,” she says. “You can walk out of your house onto a beautiful course. But what you’re really buying is the extended view. You have acres and acres in front of you, but you’re paying for a small block of land.”
And while you can’t run across the greens in your bare feet, as soon as the golf is finished for the day, there are tracks and cart paths where you can walk and bike, enjoying the natural surrounds of lush greenery and wildlife.
“Some courses are a haven for wallabies and kangaroos,” says Wolveridge. “Here in Port Douglas the pristine ponds attract the magpie geese. There are the most beautiful birds everywhere — and the odd croc as well.”
Who’s buying?
While you might expect golfing real estate to be the exclusive domain of well-heeled golf-mad retirees, that’s only a part of the story. Golfing homes appeal to a broad section of the community, especially in the post-COVID era, when home often also serves as an office.
“Probably 50 to 60 percent of my buyers are golfers,” says Wolveridge. “But in some areas people skew younger, in their 40s — not necessarily golfers, but those who want that lovely view. A lot of people like to come up here for the winter and when they’re not here, they rent out their properties.
“My very wealthy clients don’t do that, but the middle bracket come and use it when they like, and then it goes into the letting pool for the rest of the year.”
A cautionary tale
For most golf course adjacent dwellers, the only potential negative is the odd Titleist Pro V1 ball shattering the serenity as it sails through the bedroom window. But that’s not the worst thing that can happen.
Built in 1990 on the edge of the Great Dividing Range, Paradise Palms in Cairns lived up to its name with pristine rainforest providing a backdrop to rolling fairways and man-made lakes. Home to professional events including the Skins Game and Ladies’ Masters, it climbed to number nine ranking in Golf Magazine’s list of the nation’s Best Public Access Courses.
In 2016, the signature 7th hole was sacrificed to make way for an access road into a residential development of 585 luxury units. Then, horror. The course declined under new owners, was sold again, and a multimillion-dollar redevelopment plan was revealed that would close the 18-hole course and transform it into a new housing estate.
Those who dreamed of seeing out their days overlooking manicured greens are now facing the prospect of a sea of roofs.
“Once a development is established, it has to make money,” says Wolveridge. “The developer has to put in somebody who knows how to run a golf course — and that is the hard part.
“If the developer isn’t making any money, it won’t necessarily devalue the properties, but if the course does so badly it goes broke, that is the danger.”
Happily, cases like Paradise Palms are few and far between.
“I can think of so many golf course developments in Australia that are very successful, and probably only three or four that aren’t,” says Wolveridge.
As always with property, to avoid a triple bogey, it’s a case of buyer beware.
How green is your view?
A commonly held belief is that golf courses use vast amounts of water, chemical pesticides and fertilisers to keep those greens pristine. In reality, golf course management in Australia claims to be at the forefront of environmental sustainability, pioneering the use of grey water and efficient irrigation techniques as well as new drought- and disease-resistant grasses.
Following the release of the landmark GC2030 report by The Royal and Ancient Golf Club (R&A) in Scotland in 2018, Australia has joined a dozen or so other countries globally answering the call to action on topics such as climate change, resources, water conservation, pesticides, labour and land.
While golf courses have historically relied on a cocktail of pesticides and herbicides, many are today transitioning to organic maintenance practices, using natural means to control pests and promote healthy turf.
KDV Sport golf course (12 holes) on the Gold Coast and Kabi Organic Golf Club (27 holes) at Boreen Point in the Sunshine Coast hinterland are Australia’s only two organic golf courses to date. But there is no accommodation — yet — at either.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
