The Benefits Of “Green” Resorts

Today’s catch phrase in every area of our life is, “Going Green”.  And, for good reason. There is nothing wrong and absolutely everything right with doing the same old things in a new and better way.  Sometimes it costs more, sometimes less, but overall Going Green is always better for our planet.

As it relates to my area of expertise, resort real estate, Going Green is a relatively new concept that is garnering favor with developers, buyers, vacationers and the press. Resorts are springing up in all corners of the globe, and usually in environmentally sensitive locales. This happens as these sites are always the most beautiful and tranquil places where we can go to reconnect with ourselves, our families and nature. Secluded beach cottages. Island escapes. Mountain-top retreats. Mega-Yachts (yes even these are going as green as they can).

So why are these luxury lifestyle resorts Going Green?  What are the benefits to the developer, the resort guests, the real estate owners, and those in the local community?  I am a list guy, so here is my TOP TEN list of the benefits to Going Green:

1. Long term energy and water savings
2. Reduced maintenance costs
3. Retaining the pristine nature of the location – water, air, flora and fauna
4. Maintaining clean water and soil levels, or even improving them in many cases
5. Marketing advantage over non-green competition
6. Showing the local community the importance of the environment in which they live.  Helping them strive for these goals betters the community in the short and long term resulting in a better quality of life
7. Less greenhouse emissions resulting a better air quality (no matter how you feel about global warming, this is a good thing for all of us)
8. Reduced solid waste
9. Potentially higher resale values / appreciation
10. Preferential mortgage programs from Green Homes

These benefits have an immediate impact today and when maintained throughout the life of the project have benefits that reach well into the future.

With this list of benefits in mind, let’s hope that all developers bring Green properties to the market.  And while that does away with any competitive advantage and makes my TOP TEN list a TOP NINE list, we all win under this scenario.

What Is Next For Resort Real Estate – 2009 and Beyond?

On the surface, the question is rather simple to answer. In the past, real estate has followed cycles that go something like this –  in the short term, prices drop, the number of second homes purchased decline, many communities/properties go into bankruptcy, real estate supply and demand falls back in line and, in the longer term, the market return back to the normal excesses.

However, the cycle is most likely going to change.   A different cycle may start, but something will change.  Why?  Banks will be more hesitant to loan up to 90% LTV, or provide no documentation loans, or allow a developer to build a condominium building with only 60% sold.  Builders will rarely build spec homes, thus existing homes become more valuable – to the extent they have deflated in price already.  And, lastly, new trends RESORTTOPIA feels will take hold is that resort real estate purchasers will once again look for value properties, and properties with a unique benefit – be it the architecture or that they are environmentally conscious.  Yes, I said VALUE, ARCHITECTURE and ENVIRONMENTALLY CONSCIOUS in the same sentence.

In other words, they may still spend $1 million for a oceanfront property, but it will be for a 3-4 bedroom property, not a studio suite, and have a design that is unique and strives for higher green standards.  And that studio suite will be $250,000 – $400,000 and have realistic rental income opportunities.  These value properties will be found in all sorts of markets.  They may be renovation properties, foreclosures, or fire sales.  The properties may be new, but if so they will be in emerging markets such as the Grenadines, St. Kitts, Dominican Republic, Costa Rica and Panama.

And, what would seem to go opposite to the logic, these properties will not be part of large resort properties, but rather small resort properties with non-branded or boutique branded hotels, clubs and spas.  Why, well it is once again simple.  Larger properties have all amenities imaginable, but they are nearly impossible to finance and their financials depend too much on a large volume of cash flow (ie sales).  Smaller properties will still have great amenities, usually better locations, and they will be much easier to finance and thus will not drag on cash flow and be easier to sell.

Seems simple, right?