Sotavento Luxury Residences

by Sotavento, Wednesday, December 26, 2018, 20:16 (350 days ago) @ DanCip

Hi Dancip? I thought I would reply to your post and add a few clarifications:

1) The rental pool is completely voluntary. Nobody is obliged to place their unit in it. However, if you are planning on renting your unit, you are obliged to rent through the rental company. This is to ensure consistency in marketing as well as to provide a larger marketing budget so that occupancy rates can be maximized which leads to larger returns for the owners of the units. If everybody rented their units independently, there would be no coordinated advertising effort and the units would basically be empty for much of the year. Using the rental agency allows the building to be marketed year round. Furthermore, when possible renters require two or more rooms, a central agency allows this to happen by pooling the units;

2) With respect to forecast returns of 2-4%, I'm not sure where you're drawing your numbers from. Again, this all depends upon occupancy, rental rates seasonality etc. The developer is highly incented to ensure the highest possible occupancy and rental rates. They also have a a very deep background in the travel and reservation industry. One of them sold his travel business to Expedia a few years ago. I believe it was a huge cruise ship chain;

3) With respect to low capital appreciation on resales, HVS, the worlds largest resort consultancy forecasts appreciation of 8% per year in the area. Furthermore, Sotavento units have more than doubled in sales prices since 2012 and prices were raised 15% in October. Those unit holders that acquired their units in 2012 (even though they were disappointed with the prior developer, still doubled their values);

4) On December 8th, the mayor of xtapa/Zihua (Jorge Sanchez) hosted an event on the beach at the Sotavento project for many of the toursim providers in the region. I had the opportunity to talk with him at great length. Zihua has a very low incidence of violence or even theft. Tourism represents 90% of the economy and they protect it vigilantly. Hence the focus on cleaning up the town as well as the introduction of new tourist police this season.

5) Occupancy in Zihua is at a record high for the 2018/19 season (based upon advanced bookings). xtapa/Zihau is now the third largest tourist destination in Mexico. Tourism growth in Mexico is one of the fast growing in the world at close to 16% per annum. There are several large developments in the planning stage in Zihua (one by the largest developer in Florida). However, only Sotavento is on the beach.

6) Not sure what restrictions on resident owners you are referring to.


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