All restrictions on selling commercial apartments have been lifted. (Photo : http://loveandheal.webs.com)
Between budget hotels and long-lease apartments, the latter nowadays prove to be better investments in the country, and many investors are becoming aware of this fact.
China Business News reported that more investors are putting their money on long-lease apartments. Comparing a budget hotel and an apartment building both having 100 units, the latter can make investors save and earn more money.
For one, investing on long-lease apartments incurs lower cost. The initial capital requirement for a 100-unit budget hotel can be as high as 7 million yuan. For a 100-unit apartment building, 5 million yuan can be enough as capital. That is a clear savings of 2 million yuan. Money this big can certainly go a long way when invested on other things, such as the purchase of more closed-circuit television (CCTV) cameras to reinforce the security of the building and the safety of the people in it.
Another concern for investors is the daily maintenance of a building, which naturally involves lots of money. A 100-unit apartment building intended for long-term renting periods has lower operating expenses than a 100-unit budget hotel.
Wei Zishi, general manager of Chongqing-based Beike Apartment, told China Business News that given the two having the same number of units, an apartment building may need two or three workers only. For a budget hotel, Wei said that there should be “more than 20” personnel.
In terms of vacancy rates, budget hotels have 20 percent, whereas apartment buildings get a mere 5 percent. In view of this fact, apartment buildings can guarantee faster return on investment (ROI), which takes one to four years. For budget hotels, investors may need to count up to five years.
If more buildings will rise or be converted to long-lease apartments, such will be good news to those looking for a place they can rent on a long-term basis. Competition often leads to lower prices.
