Occasionally, it’s worthwhile to see how the other half lives.
When I’m not writing about real estate and finance, I have a secret second life as a travel writer, and in October I was invited to the grand opening of Amanresorts’ second property in the United States, Amangiri, located near the Utah-Arizona border.
For those of you not familiar with the name, Amanresorts is a Singapore-based hotel chain with a collection of, one might say, intimate retreats. The number of rooms at the new Amangiri totals just 34 guest suites.
How can a hotel make money with so few units? At Amangiri, room rates run from $600 to $3,000 a night — in the off-season! This is not necessarily a turnoff to some people, as the Aman clientele are so loyal they are known as Aman-junkies.
This all leads to the other way Aman makes money from its properties: It sells villas. At Amangiri, just a 10-minute drive from spectacular Lake Powell in Arizona and about a half-hour drive from Bryce and Zion national parks in Utah, the resort hopes to sell 28 villas of four to five bedrooms at a price tag of $9 million each.
When I drove around the environs of the resort, I noticed each plot where a villa would be built was indicated by a wooden platform. I had seen this marketing ploy before at the Trump development in the Dominican Republic. It is usually done in places where the views are spectacular. The idea is that you stand on the platform and get a real-world concept of the particular vista as seen from your future villa.
The villa concept is like the punitive condotel structure, but better. For one thing, you are not just getting a squared hotel unit disguised as a residence, but a full-blown, custom-designed home. In addition, the property doesn’t have to be put into the rental pool as an additional hotel rental — it can be kept as a private residence.
While all of the hotel facilities (pool, spa, etc.) are available to a villa homeowner, additional services such as maid, housekeeping or chef service are optional.
I sat down one evening with Sunny Lusted, the general manager of the property, to talk about the hotel and villas.
"So, have any villas been sold yet?" I asked.
"No," she responded, "but there has been a lot of interest. The critical thing was for the resort to get open, because it is important that people see it. That’s because you are not just buying a building (a villa), you are buying into the Aman resort lifestyle." …CONTINUED
The fidelity of Aman guests to the hotel chain extends to the villas as well.
The very first Aman resort, Amanpuri, was unveiled in Phuket, Thailand, in 1988. At opening, the resort bragged 40 pavilions and 30 villa homes. All the villas were sold.
"In the over 20 years since Amanpuri opened there has only been one villa that has turned over, and that was due to a divorce," Lusted says. "No one else has given up a villa."
During the peak recession days early in 2008, I was writing a real estate book and ended up talking with Michel Neutelings, chief operating officer of Amanyara Resort on the island of Providenciales in the Turks and Caicos Islands.
Even then, with the mortgage crisis crushing the lifeblood from residential markets across the globe, he was still closing villa sales at his property. Those villas cost $10 million to $20 million, and at the time, he said 28 out of 33 were sold. The Aman people tell me the villas at Amanyara haven’t sold out yet, so obviously sales did eventually slow down there.
The wealthy still have money, are still traveling and still spending, but even they are doing more bargaining over real estate, says Alfredo Merat, founder and president of the Villas of the World Web site.
On that same continuum from vacation condominiums to timeshares, the villas market is about short-term stays, Merat says. However, the factors that make the villa different are twofold: exclusiveness and the resort compound.
Villas are found in such very high-end locations as St. Tropez in France or St. Barts in the Caribbean, and they are usually situated on the grounds of an expensive resort. They do better than most vacation real estate because there is usually a built-in clientele. If someone patronizes Four Seasons resorts, then buying a Four Seasons villa is not out of the question.
"It’s tricky to open in this current market," says Merat, "but if you are a Four Seasons or an Aman you have a following, a good clientele, and you have a better chance of introducing a new property in a new destination."
I posed this key question to Lusted: Why would anyone want to have a home in this Utah location, nestled at the base of a canyon wall, with nothing but wilderness all around (the nearest city of any size is Page, Ariz., 20 minutes away at the southern end of Lake Powell)?
"When you look at most of our resorts, they are in varied locations around the world," she answered. "People chose specific destinations because they feel they want to spend a lot of time there. This is one of those locations where people return regularly. There are huge, high-end houseboats on Lake Powell, and the Page airport is filled with private jets. People love this area."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
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