The rugged coastline and turquoise seas around Penzance are head-turning enough for any tourist, let alone an investor. Lee Magner was no exception. "Friends kept telling me about Cornwall and its scenery, so I went there to see for myself," says the London property entrepreneur.
Truly hooked, Lee spotted a hotel for sale overlooking a cove near Penzance and promptly bought it. From now on it will be room service with a difference at the Lamorna Cove Hotel. Because, apart from the usual intake of paying guests and holidaymakers, the Lamorna will be the UK's first boutique hotel outside London, each of its 14 rooms and suites being sold to interested buyers with 99-year leases.
The scheme was launched last weekend and prices start at £140,000 for the smallest suite rising to £230,000 for the largest 500sq ft one. Any resemblance to buy-to-let ends there, however; although buyers pay stamp duty and a small ground rent for their hotel suites, the only other outlay is an annual £500 maintenance sinking fund donation, which is waived in the first year.
Guests pay £150 a night, including VAT, for a double suite in the low season and £220 in the high. Buyers can use the hotel as a holiday getaway for up to 89 days a year and a £10 a night laundry fee. "It's like the French leaseback system when buyers can use their villas or apartments for holidays and breaks as part of the whole package," says Magner.
For now, each buyer must put down a £2,000 holding deposit until he exchanges and completes on the boutique hotel, which is due to re-open next February after a major re-fit. It will then be run and maintained by a management team headed by Steve Cox, Magner's co-director and owner of the Lone Star hotel, Barbados, voted one of the world's top 100 in Tatler magazine's 2004 hotel poll.
The duo are aiming for investor yields of 5 to 8 per cent in the first three years. "While many holiday home schemes are run at a loss, due to low occupancy and high repairs costs, we want to give buyers both a holiday perk and higher returns than the somewhat saturated buy-to-let market with its average annual yields of 3.5 to 4 per cent," says Magner.
Each room and suite in the four-year-old hotel is being revamped with DVD/plasma TVs, funky bathrooms with double-ended baths and emperor-sized beds. Many suites face the sea and bathers will be able to catch sight of the occasional Atlantic breaker or school of porpoises when a raised swimming pool is built during the £1m refit. Other features include a spa, three treatment rooms, steam room, hot tubs and sauna. "We are putting meditation points around the garden with yoga teaching next to the pool for those who want to relax and de-stress. It'll be a little like a retreat without the religious connotations for City slickers, dinkies and busy commuters," says Magner. Any guest who wants an activity break can explore the coast in a motor-boat moored in Lamorna Cove or hire one of the hotel's private collection of fishing rods, artists' materials, golf clubs and wind-surfing boards.
One of the key questions potential buyers will ask is the Lamorna's likely occupancy rate. "In the first year we are estimating an average occupancy of 55 per cent, with a bigger percentage in the high season," says Magner, who aims to attract guests in the low, as well as peak, seasons with private weekend charter flights from a London airport. "Our long-term aim is to set up a network of countrywide boutique hotels in the UK and overseas," adds Magner.
Stuart Law, the managing director of the Property Investors Club, says: "Boutique hotels are excellent alternative investments for anyone seeking diversification in his or her property portfolio. Unlike residential property, investors don't have to spend time and expense seeking out tenants.
"Setting up a boutique hotel in a rural or coastal setting makes it instantly attractive to city folk who want to get away from work pressures and chill out for a few days. As it has a far higher turnover rate and longer void periods than a buy-to-let property, the investor must ensure his annual yields are protected, and if necessary guaranteed, by the managing agents," adds Law.
To view Lamorna Cove Hotel, contact Polly Sowerby at Knight Frank on 01392 848844; email@example.comReuse content