Have you ever stayed at a really nice hotel and wished you could live there? Housekeeping and room service included? Well aside from these nice amenities that make a visit to a hotel just that, you could soon actually be living that hotel lifestyle should you choose. That’s should you buy one of the newest condo units in Canada – the kind that was once a hotel room.
It was the latest report done by Colliers International Hotels that showed that condo developers were the purchasers of at least half of the hotels that are currently on the market. And while it’s a trend that’s occurring all over the country, there are some particularly hot spots for it.
“This theme has been fuelled in part by the strength in the residential condominium market in Toronto and Calgary,” Colliers said in a statement along with the report.
As you can see from the chart below, there has already been a huge push for hotel purchases this year across Canada; and we’re still only 8 months in. What’s more, is that more than half ($335 mill to be exact) of those purchases went towards new development purposes.
“We will continue to see the conversion of hotels that have a higher and better use for residential and in some cases retail,” said Alam Pirani, executive managing director of Colliers Hotels. “That conversion has made way for some of the new product that has come in. The good news from a supply perspective is the older product is converting which is creating less of a strain on supply. Everyone is concerned about the number of new luxury hotels opening up but the flip side is you have conversion to alternative use.”
But even though this might be a boom that’s happening all over the country, it’s still a relatively new one. As you can see from our next chart below, while scooping up hotels for new development has been all the craze among developers this year, last year they were far less likely to embark on such projects. In fact, while almost 50 per cent of hotel purchases in 2012 have been for development, only 7% of hotels could say the same last year.
Many might contribute the trend to some of the much higher-end hotels that just bring with them that certain air of enticement. The Trump Tower, the Ritz-Carlton, and the Shangri-La, all hotels based in Toronto, certainly seem to point to the fact that true luxury is the only way to go. And that might be true, for people that want to live in them anyway. But there’s another sector that’s taking advantage of this trend too, and that’s retail. One Travelodge in Calgary has recently just been sold to be turned into retail stores, as it’s alraedy closely located between some other retail opportunities.
In addition to the findings, Colliers also showed that more alternative uses will be found for hotels; and that this will help drive up that segment of the marketplace.
“Looking through the second half of the year,” Colliers said in the report, “we expect sales activity to remain robust, given a good mix of institutional-quality urban and suburban assets currently on the market and being met with strong buy-side demand.”
