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Miami Real Estate - Miami Real Estate news

Thursday, October 04, 2007

Trump Suspends Plans for Las Olas Resort

Donald Trump planned two Condo-hotel projects in Fort Lauderdale during the recent hotel boom in South Florida. Now that there’s cooling enthusiasm for much of South Florida's recent hotel boom, Thump’s partners are worried about condominium sales and have suspended one of the projects.
Even with Trump’s enthusiasm in the Trump International Hotel and Tower which is currently under construction at the north end of Fort Lauderdale Beach, plans for his Trump Las Olas Resort to the south have been put to a halt.
Trump agrees with his partners that it unwise to build during the current market slump and is going to wait until the Florida real estate market comes back.
Celebrity builder Donald Trump is not the only developer to put plans on hold. One research company says that the 7,629 condo-hotel units currently under construction in Miami-Dade County reflect a 28% drop from a year ago.
Ugo Colombo, another prominent Miami real estate developer, and his partners have decided to run the Cipriani, in Miami Beach, as a traditional resort with a separate tower of residential condos as opposed to selling units as a condo-hotel.
The Related Group’s executives have also suspended sales of condo-hotel units at their two Viceroy projects in South Beach and Miami as they decide whether or not to keep the units as standard hotel rooms.
There are other challenges now that are being magnified by the housing slump. For instance, national hotel chains have changed their enthusiasm for condo-hotels and are refusing to lend their brands to projects unless developers promise to leave a large percentage of rooms unsold. Lenders now see the lodging sector a better bet than condominium real estate, with hotels charging record room rates.
Some developers are facing buyers disappointed by their units' monthly returns, and are facing lawsuits accusing them of securities fraud for advertising condo-hotels as lucrative investments that have ended up showing weak returns. Two such lawsuits have already been filed against projects in Marathon and Las Vega.
One broker noted the “old saying” that developers, for every $1,000 they spend building a hotel room, should receive $1 in rental revenue. In essence, a room that cost $300,000 to build should rent for approximately $300 a night. However some condo-hotel units in South Florida sold for $600,000 to $800,000 which means they should be renting for $800 a night. The prices are suitable for New York maybe but we don’t get those kinds of rates in South Florida.
Broward ranks as the nation's 36th largest lodging market, but with nearly 2,800 units under development, it finishes sixth in terms of condo-hotel activity.
Some experts see the condo-hotel enthusiasts shifting from real estate speculators to those that are more interested in owning vacation homes than turning a profit by renting out hotel rooms. For the occasional user there is no better buy than a condo-hotel, someone else takes care of it as it generates more rental income than a vacation condo.
Trump predicts that the condo-hotel concept has a bright future in Florida real estate and in other resort destinations, particularly in popular vacation spots like South.

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