Banyan Tree’s villa sale still on

Source : Straits Times - 9 Oct 2008

BANYAN Tree Holdings is going ahead with the second sale exhibition of its hotel-based properties despite some of the worst economic news in years.

It will sell the residences - mostly villas in its hotel operations - in Phuket, Bangkok, Bintan, Lijiang (China) and the Seychelles under a leaseback scheme.

The listed resort operator is proceeding with the exhibition at the Fullerton Hotel as a delay might not make much difference, said group managing director Ariel Vera. ‘Our buyers have to be high net worth individuals so the credit crunch will not be a problem for (them).’

Still, buying sentiment has been hit.

‘The crisis is still unfolding. Even those with money are waiting for prices to drop before they buy,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

‘There’s a great amount of uncertainty and caution in the market, even in the luxury property sector.’

Sales of Banyan Tree Residences, as the hotel properties are known, have defied the mood and risen this year.

In the first half, Banyan Tree sold 44 residences - mostly in Phuket. This was up from seven in the first half of last year, when the Banyan Tree Residences concept was launched.

Prices start from US$600,000 (S$880,000), with those in Phuket costing between US$1.75 million and US$4 million each.

Buyers can either get a fixed return of 6 per cent of their purchase price for six years - this works out to about 5.1 per cent net for a property in Bintan or Phuket - or one-third of the net room revenue for six years.

Mr Michael Ng, managing director of Savills Singapore, which is helping to market the residences, said there are keen investors around. ‘A lot of people are getting out of equities and looking for alternative investments,’ he said.

To entice buyers, Banyan Tree is offering a 3 per cent discount, up from 2 per cent last year.

Those who buy a higher-priced property will also receive free lifetime membership to the Banyan Tree private collection of hotels around the world.

Those looking to exit their investment will have to find their own buyers. There is no buyback guarantee, but Mr Vera said they have acquired some back from those who have upgraded to bigger residences.