With good profitability, resort real estate is still an attractive investment channel, receiving the attention of many investors in the midst of market fluctuations. AHS will provide you with more information in this article.
The nature of resort villa investment
Buying a resort real estate product is completely different from buying a normal apartment to live in, because they are an investment product. Invest in the opportunity to make a profit from buying land in developed tourist areas, and also invest in the opportunity to make a profit from business activities on these tourist lands.
It doesn’t matter how far away the villa is from you, it doesn’t matter that you won’t be able to use it freely, but from the “tourism potential of heaven, the profit potential of the land” for you to judge and make investment decisions. Of course, you also need to consider very carefully the investors – those who will take the money and invest for you, building attractive resorts that bring benefits to all villa buyers.
Risks that may be encountered when investing in resort villas
Besides the attractive figures and great incentives from resort villas, this type also has the risk of arising from both objective and subjective factors.
Risks from external factors
Regional economy: the level of economic development will affect the quality of service, infrastructure of the resort and surrounding area, impacting the target audience and customer range.
Politics: When politics is unstable, it will affect the safety of domestic and international tourists, and is also an important factor in whether they decide to stay there or not.
Natural conditions: Location, climate, natural disasters are unavoidable factors that humans can hardly influence. With resort real estate, these factors have a significant impact on the uniqueness of the product as well as the safety of operation. Customer demand: Products that want to gain a foothold need to hit the psychology and tastes of customers. "Hitting wrong" will certainly not bring high profits. Competition of supply: experts are warning about the risk of saturation in the resort real estate market.
Fluctuation of bank interest rates: no one can predict the fluctuation of bank interest rates. If the bank interest rate fluctuates more than the committed profit, the risk will belong to the investor.
Risks from choosing investors
The investor is the one who is primarily responsible for using the capital of investors to build resorts and do business to earn profits. Therefore, if you do not choose carefully, you will definitely "throw money out the window", at risk of losing everything.
When choosing an investor, it is essential to pay attention to the following three things:
Visionary investors: The vision and business development orientation of the investor is extremely important. If you choose investors with a long-term strategic vision, a large-scale development orientation, the ability to create real estate products with outstanding and unique values, and most importantly, suitable for customer tastes, then your ability to recover capital is certainly guaranteed up to 30%.
Investors have a stable source of income: The ability to pay profits of an investor needs to be built on solid evidence. And the annual income of the investor is the most reliable evidence to help investors feel secure in investing. Ensuring this factor means you have gained 30% more ability to recover capital.
Dedicated investors: Customers using resort service packages are mostly middle and upper class people. The demand is extremely strict, always requiring the most perfect products. Only truly dedicated investors, always caring about customers, and at the same time caring about investors can have outstanding products, bringing long-term investment efficiency. Finding a dedicated investor can determine the ability to recover capital for 30%.
Risks from the product
Product quality: each product will have different locations, amenities, service quality, and designs. This creates differentiation, and is also a decisive factor in the value and long-term appeal of the product. Therefore, if a product is not developed based on market research, needs, tastes, future trends, etc., it will be very difficult to compete.
Brand: In any field, a good brand always gains trust more easily from customer care services and gains customer trust from its own reputation. In case the brand is affected, it will inevitably affect the product as well.
Project management & operation unit: Unprofessional management unit, ineffective operation makes investors face difficulties, affecting profits. Investor capacity: may encounter problems such as poor finance, low capacity, easily leading to risks such as: slow progress, poor quality products, unsecured profit commitment, etc.
Risks from financial leverage: borrowing to buy/invest in real estate is not uncommon, but with resort villas, investors need strong capital. If the loan is too large, it can be a double-edged sword when investors are not sure about cash flow.
Liquidity risk: resort villas are actually less liquid than other types (land, townhouses, apartments, etc.). Therefore, it is more suitable for long-term investment than short-term trading. If not determined from the beginning, investors will easily encounter risks. Ability to operate resort villas: the ability to operate after handover affects room capacity, room rate/night and annual profit of investors.
Above are some assessments of the risks that may be encountered when investing in the resort villa model that AHS wants to send to investors. Please follow our next articles for more information.
