International buyers have become the best hope for Central Florida's beleaguered condo-hotel developers, many of whom have truncated or indefinitely delayed their once-ambitious building plans. During the real estate market's white-hot days several years ago, plans for condo hotels abounded. Projects totaling nearly 15,000 rooms were proposed throughout the region, and developers launched upbeat sales campaigns that promoted hotel rooms and suites as second homes with cash flow attached.
But only a handful of the projects have broken ground. The few that are moving ahead say they are focusing on overseas buyers, pitching their projects as good deals for those who can benefit from favorable currency-exchange rates. Foreign customers are a small group, however, not large enough to keep developments on track. "We are not unlike everybody else in this market," said Gregory D. Lee, president of Jordan Development Group LLC, which is building WorldQuest Resort, a multi-phased condominium hotel off International Drive. "Nobody is going to move ahead with the program they intended. We are not going to be able to sell or build the volume we expected."
Lee said financing is a big obstacle. In the past half year, he said, the subprime-mortgage meltdown has made lenders skittish. That makes it harder for potential room buyers to find mortgages. Nevertheless, WorldQuest is finishing a 70-unit third phase this spring that will be added to the 170 units already open in what it planned as a 600-unit project.
Many who placed deposits on yet-to-be-built condo hotels two or three years ago were part of an investor frenzy that supercharged the entire real estate market. But as the market cooled, buyers withdrew. "We had an incredible window open for 12 or 18 months where it seemed like the sky was the limit," said Larry Cohen, vice president of Lake Buena Resort Village & Spa. "It used to be you could get people to just walk in and sign a contract. Now it takes two or three visits and a lot of questions."
Lake Buena Vista Resort Village, which opened last year, continues to build, but at a slower pace. Cohen said 112 units were sold last year -- a third of the project's 2006 total. And prices have been reduced by 6 percent to 9 percent on units that start at $339,000. The Lexington, a condo-hotel conversion in downtown Orlando, went into bankruptcy last year and was sold last month. In Celebration, The Related Group closed its sales office last month for what was to have been a $200 million luxury condo hotel.
Developers have marketed condo hotels as vacation homes with advantages. Owners could use the rooms and suites whenever they pleased, but when they were away, the units could be rented, generating income. Interest in the idea soared for a while, and several very large -- and expensive -- hotel plans were unveiled locally. Two of the biggest -- The Blue Rose on Universal Boulevard in south Orlando and the Palazzo del Lago/Intercontinental Resort and Residences on International Drive -- are still in the planning stage.
"We are finishing our design-development plans with the city," Blue Rose developer Camilo Aguirre said. "We changed the project, but it will have the same number of units." Aguirre said he expects to close next month on a $1 billion joint venture with a European fund, allowing the 1,300-unit project to move ahead. The Blue Rose continues to market condo rooms, but Aguirre said the focus will be on overseas sales offices and markets in other parts of the United States. "We are doing seminars in Northeastern cities, educating the snowbirds," Aguirre said.
Developers now plan to break ground on the 1,215-unit Palazzo del Lago later this year, with plans to open in 2010. The developer, Hospitality Development, continues to sell units as condos, but Chief Executive Officer
Source: Orlando Sentinel