This content was prepared by Safari Group and is being published by NZME as advertorial.
An "appealing and approachable" step into commercial property investment is being provided by property developer, Safari Group.
"Forget the timeshare or the management agreement," says Simon Taylor, Director and Senior Development Manager at Safari Group. "Our model comprises a freehold unit titled apartment, which you own outright, with a strong commercial lease in place."
The concept is enjoying significant success in locations that at present include Auckland, Wellington, Christchurch and Queenstown where Safari Group carefully selects an international hotel brand partner, and retains the hotel management rights in-house, ensuring the long-term success of the hotel, accountability and control.
Founded in the 1990s and with a reputation for being highly innovative and always keeping ahead in the property market, Safari Group's most recently completed round of projects include Ramada Newmarket and Ramada Wellington, which opened in 2021.
Because Safari Group retains control in-house, through almost every single step of the process, from acquisition and design to development and construction, they have developed excellent systems, repeat contractors and proactive managers, all of which combine to ensure projects are finished on time.
"We've had no trouble selling the hotel units historically, with overseas investors quick to see the benefits of this bite-sized commercial offering" says Taylor.
He says the concept is far removed from the traditional timeshare model – and some of the other offerings in New Zealand where investors and hotel operators clashed over issues and costs around management.
"In our case, things are completely different. The hotels are purchased with a commercial lease in place, rather than a management contract.
Additionally, the new tax deductibility rules around property investment don't apply to them, and nor do Overseas Investment Office regulations, as it's a commercial product, not residential.
"The purchaser receives a monthly payment for rent from the hotel operator, with the added bonus of 10 days free stay each year," Taylor says. "This has definitely appealed to our buyers from places like Tahiti. They can't wait to come back to New Zealand, and we can't wait to welcome them back, now that the border is open again."
Taylor says local residential property investors – struck by fear or uncertainty in the market – are currently rethinking their approach, and considering the nature of their portfolios. Many have begun investigating the prospect of buying a commercial property. "The thing is that they don't necessarily want - or have the means - to buy a factory or a warehouse. Our model, in terms of our hotel proposition, presents an approachable, hands-off commercial investment with none of the tenant issues that residential apartments can bring, all while diversifying their portfolio."
These units are GST exempt, they come fully furnished, with any damage covered by the hotel operator. Hotel investors, sign up for a 30-year lease, which is made up of an initial 15-year term, followed by rights of renewal at three five-yearly intervals.
They can expect a fixed and guaranteed rental income, paid monthly, by the hotel operator with a two per cent compounding annual rental increase after three years and a market review every five years (ratcheted).
Safari Group is currently marketing hotel units in its latest developments, La Quinta Ellerslie and La Quinta Parnell, again in association with La Quinta, a four-star offering by Wyndham.
Both locations are home to scores of businesses and Taylor says that a definite need for new hotel accommodation around those areas has been identified.
He says the La Quinta Ellerslie location is not only about people who are travelling to Auckland for work.
"This location is incredibly central, close to road and rail links, making almost all of Auckland easily accessible and it's handy to Ellerslie Racecourse, Cornwall Park, Alexandra Park and other attractions."
On the other side, La Quinta Parnell is a boutique hotel with only 54 rooms, perfectly situated at the crest of Parnell Rise and in close proximity to fine dining restaurants, art galleries and shops.
He says that investors can expand their holdings, by buying single hotel room, studio hotel apartment or one-bedroom hotel apartment in any of these two hotels.
Prices start at just $252,680, returning a gross rental income of $15,000 per annum. Taylor says that in keeping with their ethics, and to ensure long-term quality and value, Safari Group will own and operate both hotels.
They’ve found that by doing so, they get the satisfaction of remaining involved in a project which they and their wider team have put in a great deal of time and effort to bring to fruition.