42.4 F
New York
Friday, March 29, 2024

NY’s Oversaturated Lux Hotel Biz Attracts Bargain Hunters

Related Articles

-Advertisement-

Must read

Investors with the funds and capacity to purchase New York City hotels are finding that now is a brief window of opportunity to purchase real estate treasures at bargain prices. The hotel-building boom in the city has resulted in an oversupply of rooms, lower hotel room rates, and very likely rock bottom price per keys for the hotels themselves.

“Prices were low because we had an unprecedented oversupply,” said Jeff Davis, senior managing director of Jones Lang LaSalle’s hotels and hospitality group. “But that is already started to change. We are headed for an extraordinary recovery in the next 2 to 3 years.”

In 2007, there were a total of 73,692 hotel rooms and only 357 hotels in the city. By 2017, those figures flew to 115,532 rooms and 632 hotels, as per NYC & Co. Another 18,960 hotel rooms are currently in development and will hit the already saturated market by 2020.

As reported by the NY Post, this has caused the price of staying in a hotel room to plunge by 30 to 50 percent, despite a decent rise in tourism. All this has led to bargains for real estate moguls in NYC. However, the deals are not expected to last long. With interest rates on the rise, borrowing will become less profitable. Furthermore, since NYC is now cracking down on Airbnb and other short-term rental hosts, investors feel that the hotels will soon feel the relief.

One business mogul to cash in on this opportunity is Rotem Rosen, co-founder of MRR Development. The Manhattan based Real-estate powerhouse just opened in2017 in partnership with industrialist and Indian billionaire Anand Mahindra, and former Deutsche Bank executive, Jerry Rotonda. In the company’s first deal, it has purchased Hotel Indigo, a 294 room property on the Lower East Side, for $162.5 million. The transaction, which just closed on Thursday, raised $73 million on the Israeli bond market. “Prices have bottomed out. It is unbelievable that the Indigo Hotel, a 300-room hotel, sold for around $540,000 a key — a brand new hotel that opened in 2015,” marveled a source. “This is how you can see the difference from where the industry was and where it is today.”

Similarly, The Arden Group is in contract to acquire the ground lease for the Viceroy Hotel at 120 West 57th St. for $41 million. The 29-story, 240-key stylish hotel, south of Central Park, last sold in 2013 for $148.5 million. That is a whopping difference, making the price per room $170,000 down from its previous $620,000 price tag.

By Hellen Zaboulani

balance of natureDonate

Latest article

- Advertisement -