Hello everyone! Just wondering if any sifus and forumers here have any experience with GRR or hotel profit sharing models in general?
Mind sharing which project u guys invested in before this and whether u guys made money or ended up sueing developer?

Thx!

Hotel business is not guaranteed profitable especially in first two years of operation.

Most if not all grr, rental is included in the inflated spa price. So call rental income is practically from buyers themselves.

Currently getting GRR for Ion Delemen Hotel Project.

So far so good, but hasn't been that long - about a year only, have to wait and see and hope that all continues to go well.

The GRR for Ion Delemen is how many years? What happens after GRR over?

You are at their mercy of whether they want to "renew" or sign a new rental contract with you.

In addition, they can revise the "returns" on the new contract.

The only "guarantee" you have is whatever listed on the initial SPA (normally is like first 2 or 3 years @ x % with options to renew for another 2 years @ y %)

If for whatever reasons they find it's unfavourable to renew, then you get 2 or 3 years of the GRR

My advise would be to look at after "GRR" period and what is your "exit" plan.

That's what I'm asking, what's on the agreement? Is it 2 years? 3 years? Any profit sharing after that?

The GRR is for 3 years.

After which is goes to profit sharing for the following 3 years whereby the split is 70/30 with owners and management.

This will mean that earnings will fluctuate depending on occupancy rates.

After a total of 6 years, it will be up to the developer if they choose to renew and also if we choose to accept.

Talking about Genting. The package as far as I know for Grand Ion Majestic is as below:
- 7% GRR per year for 1st 3 years
- rental paid by quarterly basis after deducted maintenance fee & sinking fund
- 4 months advance maintenance fee and sinking fund deducted 1st quarter year rental
- last 4 months on 3rd year rental will be deducted for unit refurbishment purpose

But this project is sold at an even more expensive pricing (1400psf) than the previous project - Ion Delemen (900psf)

Not sure if after 3 years the profit sharing package is same as delemen

Totally agree. When buying hotel based product one of the most important thing to consider is the exit strategy.
This is especially true when its bought at an inflated pricing.
5 years down the line if planning to exit - Who would buy that product then?
Own stay? Who in their right mind would buy a hotel?
Investors? Why should he buy from you at even higher price and unguaranteed profit.

And not forgetting the hefty maintainence fee. RM0.64psf

For Ion Delemen it is RM0.46psf.

Not too hefty for a studio unit. Also I don't mind paying more so they can maintain the place well. In that Weather up there, things deteriorate fast.

With regard to the exit strategy approach, for this genting project i'm looking long term, not looking to sell after GRR and profit sharing deal ends. I believe if the hotel is making money, i'm sure they will extend the profit share with owners. So just need to hope that the hotel continues to make money.

Also with their Ion Majestic coming up just next door, I am more confident they see more potential there and the need for more rooms. Can check out my post in my signature below - What is the Best Area for Property Investment in Malaysia for 2018?, for my views on Genting.

But.. as with all investments, there's always risk. Have to wait and see. For the time being though, all seems well.

prior to commitment of GRR based property, must really look into the future exit plan.
hotel based property is a no go, as its demand is seasonal and depend very much on the operator success to help you sustain the property.

GRR property is good as owner will get return for the initial years (most uncertain years for demand), as usually a development require initial few years for occupants to fill up units.

should the area have potential for permanent occupants to stay, then that is a good place to invest. for example a place that offer job opportunity (near factory/offices), city centre (short term rental demand), education hub (university / college) subject to its course fees- as you need tenant that can pay you good rental rate, medical centre (hospital) can bring in real demand as workforce require accommodation & patient require short term stay.

i think above info is sufficient for everyone to consider before invest in any GRR property.

one last point, if you have doubt on developer ability to pay during GRR; so you need really careful in selecting a project, even if self-manage by owner it still can bring in tenant, then by all means you can proceed with the purchase.

https://www.facebook.com/129011692114/posts...55711587162115/

GRR.

Genting Malaysia is going to build over 2,000 hotel rooms with a few hotel operators.

Genting is hot.

Hotel operation normally changes hand btw 7 to 10yrs.

A surplus of hotel rooms is expected.

They are preparing for the opening of warners bro theme park rite?

Should be a hit.

2000 units....wet wet water lah....

Afterall genting has the worlds Guinness record of the most rooms hotel operation in the world.

The vision of a man that came to malaya with few ringgits in his pocket.

Haha agreed!

Don't see there being an oversupply there anytime soon.

The man, the myth, the legend - Lim Goh Tong.

Forgot to add ..

And a lot of bribery.....

GRR = RFF
Run Fast Fast

Historically, there hasn't been a shortage of rooms in genting highland. Rooms demand during peak period alone won't be sufficient to be profitable.

This post has been edited by icemanfx: Nov 18 2018, 04:32 PM

Agreed!!

Better dont get duped into grr... Dev aways win

And a good friend named TR.

This post has been edited by Hofmann33: Nov 18 2018, 05:55 PM

Don't have data for more recent years but 'historically' in 2014 and 2015, Genting reported overall occupancy of 90% throughout the year for its 4 hilltop hotels.

Think that's sufficient to be profitable.

Lulz..
Solo true 😊

90% sure or not? If is 90%, the difference between peak and off peak rack rate would be insignificant.

Historically also there wasnt any low cost no frill flights lah.

Check out data of tourist arrival to malaysia now compared to 20 yrs ago

Somemore social media is widely available now.

Like father like son????

What am i talking......stop it.

Genting know hotel rooms demands and unlikely to leave any meat to outsider.

If demand is strong and profitable, many hotel operators like Sunway, royal chulan, tune, etc would have built
n years ago, wouldn't leave opportunity to outsider like developers.

This post has been edited by icemanfx: Nov 18 2018, 10:47 PM

make no sense..

how are they going to build in genting where all the land there belong to genting?
genting is not cash trapped that need to sell parcel of the land to outsiders.

Ion delemen and ion majestic make sense?

I am a real estate negotiator here.
throughout the years i have refused to sell GRR projects based on following reasons:

1. inflated SPA price- the x years GRR comes from marking up your SPA price and using that additional money to pay you back.
2. usually the developer will setup another so called management sdn bhd company and sign the GRR agreement with you. anything happened, end up you will be suing the 3rd party company instead of developer
3. Usually the property with GRR are small retail lot or one hotel room. in the future if you would like to sell it off, think about this: who would want to buy a hotel room???

https://www.edgeprop.sg/property-news/somer...th%20returns%20

Sure its 90%?
Kinda hard to believe...
Also not forgetting... Peak & non peak season pricing also needs to considered 😑🙍

Is true, 95%occupancy as stated in pg.36 of their 2017 annual report.

oh wow..
not bad
no wonder always profit...

genting is known to give free accommodation to freeloaders.

genting doesnt own the entire mountain lah

Why hotel operators like Sunway, royal chulan, tune, etc not invest there but leave it to developers/grr?

I think they know they cant fight with genting with more inferior locations.

Personally i feel that ION delement has too high price per square feet. You better buy windmill with more room for appreciation

Good points.

It is very smart of the developers. After a few years giving you rent with your SPA price, when your unit is aged, needs renovation and not generating good rent, they will return the unit to you. Cantonese saying: you put forth the chicken, they put forth the soya sauce.

This post has been edited by icemanfx: Nov 22 2018, 12:18 AM

Genting's main money making machine not rom hotel business. Genting just want to make money (load of it) from gambling business. The hotel is just to attract ppl to stay, eat, gambling and enjoy the theme park.

Ion and windmill will not able to compete with genting hotel because 1. Location 2. Genting can cross subsidise their hotel with their other businesses.

Ion/windmill need to make money from their business and most likely majority of their guests would be spillovers from genting.

This post has been edited by gks: Nov 22 2018, 02:16 AM

If grr project is long term financially feasible, developer would have pitched to reit, need not spend $ on re agents, marketing and promotion.

Do not buy from NCT, Good luck for the investment. GRR delay 21 days until now not release. PSS less than 15% of your instalment. Unethical developer, when owner want to audit, keep delay the documents.

I was wondering if genting room is insufficient why first world hotel giving so many free room away instead of give cheaper room to traveller for gambling😝 impossible got money dun wan earn mah

Genting makes more money by first world giving free stay to gamblers. Gramblers family members spend more in f&b than travellers

Genting earn so much through F&B n their freaking parking harga yahudi