Real Estate News What is the “tourist brick” and how it ensures a good return in dollars: investment options - Infobae

[BuySellBA]

What is the “tourist brick” and how it ensures a good return in dollars: investment options - Infobae



Source:

Qué es el “ladrillo turístico” y cómo asegura una buena rentabilidad en dólares: las opciones para invertir

Atractiva para quienes buscan resguardar su capital en tiempos de alta demanda turística, esta inversión en edificios ofrece rendimientos en dólares de entre 7% y 12% anual, con pagos mensuales o trimestrales

www.infobae.com

November 04, 2024



Attractive for those looking to protect their capital in times of high tourist demand, this investment in buildings offers returns in dollars of between 7% and 12% annually, with monthly or quarterly payments.



By Jose Luis Cieri

This profit is settled monthly or quarterly from the start of the hotel's operation. "The developer, the consultant, the hotel chain and the asset manager are key in this business," said Alem.



The current situation is driving this type of investment in the region: with travel demand projected to grow by 5.8% annually over the next ten years, and supply barely exceeding 2%, there is a considerable supply gap in the hotel market (according to the World Tourism Organization, UNWTO ).

The condo hotel allows small and medium-sized investors to access the hotel sector, where they obtain a title of ownership and share the profits generated by the hotel services.

In countries such as Argentina, Brazil, Uruguay and Paraguay , hotel expansion responds to this demand, offering opportunities for investors seeking to diversify their assets with high returns and the security of real estate.

The three “R”s​

This type of investment in tourist income offers greater capitalization and profitability than traditional real estate assets.

The sector highlights that the RET is structured around four pillars: real estate value (bricks), brand and professional operation (hotel), profitability (6-8% to 12-15% in dollars) and the enjoyment of owning a hotel.

Furthermore, the three “R”s that define the format are Profitability, Revaluation and Support of hotel chains, presenting a solid formula for investors seeking higher returns and supported capitalization.

More options​

One of the main advantages of RET compared to investing in rental apartments is the possibility of recovering the investment in half the time.

Puerto Iguazú and the waterfalls also boost the tourism "brick" business in Argentina, an emerging tool

Alem explained: “This is due to the dollarized tourist flows and the professional management of the properties, which includes hotel maintenance and renovation, covered by a reserve fund. In addition, investors benefit from turnkey management by expert hotel operators and tax benefits.”



Investment options include condo hotels, which allow small and medium-sized investors to participate in the hotel business without having to make multi-million dollar investments. Investors acquire a hotel unit and participate in the profits generated by its operation, thus gaining access to higher rents and revaluation of their assets.



Three investment verticals are also presented: condo hotel, serviced apartments and vacation ownership, each with its focus on tourist income.



How to invest?

The process for investing in a condo hotel is agile: interested parties acquire a hotel unit that is part of the general operation and receive a dollarized rent, which allows them to become co-owners and participate in the profits generated by the hotel operation.



There are more than 1,000 projects under development in destinations such as Puerto Iguazú (Misiones), Paraguay, Punta del Este (Uruguay) and other points in Brazil, such as Rio de Janeiro and Fortaleza , with properties designed to attract international tourism and take advantage of the growth of the sector in the region.



Alem concluded: “Compared to traditional real estate investments, this type of investment doubles or even triples the profitability, depending on the destination and the value proposition of the hotel. Investors gain significantly higher profitability thanks to the efficient operation of the hotel. Although this type of investment is well established in other countries, it is still in its infancy in Argentina , with great potential for growth.”


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[Wally]

You have to be careful with these condo/hotels. It is all in how they manage it and how reputable the manager of the company is. I met an American that bought into one of these condo/hotels in BA a few years ago and the company ran off with all the money and it turns out they never paid the taxes of the owners.

 

[earlyretirement]

You have to be careful with these condo/hotels. It is all in how they manage it and how reputable the manager of the company is. I met an American that bought into one of these condo/hotels in BA a few years ago and the company ran off with all the money and it turns out they never paid the taxes of the owners.

Very true and a good point. These can be a great investment but it all just depends on the track record of the company running it. I also have seen several condo-hotels in Buenos Aires over the past few decades where the developer managed the buildings and they had no experience in them. In several projects in Palermo Hollywood, the management company ran off with all the money.

And just as you mentioned, @Wally many times they did not pay the property taxes or income taxes as they stated they were doing. It left owners in a difficult situation. I own an apartment in Palermo Hollywood in such a building. I just managed my own property but many in the building lost a lot of money at the end of the day due to unethical management company.

This is the biggest risk. You have to have a really good property manager in Latin America or you can run into a lot of problems.

 

[Digital Nomad]

Very true and a good point. These can be a great investment but it all just depends on the track record of the company running it. I also have seen several condo-hotels in Buenos Aires over the past few decades where the developer managed the buildings and they had no experience in them. In several projects in Palermo Hollywood, the management company ran off with all the money.

And just as you mentioned, @Wally many times they did not pay the property taxes or income taxes as they stated they were doing. It left owners in a difficult situation. I own an apartment in Palermo Hollywood in such a building. I just managed my own property but many in the building lost a lot of money at the end of the day due to unethical management company.

This is the biggest risk. You have to have a really good property manager in Latin America or you can run into a lot of problems.

Wow this is crazy. That is my biggest complaint here. So many cheats here and hard to trust anyone. My girlfriend said even butchers give the worst quality to people that they don't know. She said to foreigners they will often give the oldest meat.

I think if I bought something here I would only trust my girlfriend's family or people she personally knows. Seems like no one has the mentality to work with someone for a long time.