Did Mandarin buyers pay too much for their luxury condominium?
According to the Boston Herald, Greater Boston, the luxury condo market has a “7.5-to-12 month supply” priced at $2 million and above.(i) Boston’s ocean front properties experienced a 40 percent drop in median prices in the first quarter of 2006 in comparison to the same period in 2005.(ii)
The Mandarin Oriental Brand: Is its real estate value sustainable?
Owners of branded residences often pay a premium. According to Kristin Ruble, director of sales and marketing at the Mandarin Oriental New York, “Certainly the price per square feet is higher than the building next to us, but our residents have access to our pool and fitness center, plus they get priority treatment at our restaurant and spa.”(iii)
But how unique is the Boston Mandarin Oriental Residences? Will the brand’s value be diluted as Mandarin Oriental expands its business globally? By 2009 Mandarin Oriental will almost double their number of hotels in the U.S(iv) If Mandarin Oriental continues this rate of expansion, how long will the brand retain its exclusive appeal?
Could a long-term labor dispute impact condo values?
In San Francisco a long-term labor dispute that began in 2004 may have lowered the value of hotels that went on the market. The San Francisco Business Times reported, “The Four Seasons went on the market in October with hopes for at least $500,000 per room and speculation that rooms could reach $700,000 or beyond” instead “the San Francisco Four Seasons ended up fetching closer to $460,000 per room.”(v) The San Francisco Business Times also reported that “Another hotel involved in the labor dispute, the Argent, had been expected to fetch between $300,000 and $400,000 per room after it went on the market in October.”(vi) This hotel reportedly sold for only $258,000 per room.(vii) Condo buyers should be asking themselves whether a long-term labor dispute will depress the value of the Mandarin condominiums.
i Scott Van Voorhis. “Luxury Condos Sitting for Sale.” Boston Herald, 25 March 2006 (describing Boston-Brookline-Cambridge markets). ii Scott Van Voorhis. “Waterfront Condo Woes; Average price 40 percent less than ’05.” Boston Herald, 4 May 2006 iii Robyn Taylor Parets. “Why Condo Hotels are a Hot Concept.” National Real Estate Investor 1 May 2005. Accessed on 26 June 2006. iv Mandarin International Limited Annual Report 2005 page 11 v Ryan Tate, “Four Seasons, 2 other S.F. Inns Find Buyers but Prices per Room Show Labor Dispute put Chill on Market.” San Francisco Business Times 3 February 2006 vi Ryan Tate, “Four Seasons, 2 other S.F. Inns Find Buyers but Prices per Room Show Labor Dispute put Chill on Market.” San Francisco Business Times 3 February 2006
vii Brian Miller, “$440M Westin St. Francis Sale Closes.” GlobeSt.com 2 June 2006. Accessed on 5 June 2006.