Lower availability of investment-grade hotel assets that were put up for sale contributed greatly to the significant drop in the hotel investment volume last year, JLL reported in a release issued today (Feb 4).
“Thailand witnessed four major hotel investment transactions in 2019, including Four Points by Sheraton Bangkok, the old Customs House (leasehold, a historical building by Chao Phraya River to be converted to a hotel by U City PCL), Anantara Baan Rajprasong (leasehold, currently Dusit Suites Hotel Ratchadamri Bangkok) and Beach Garden Hotel Cha Am.
“Concluded by JLL as the exclusive agent, Four Points by Sheraton Bangkok represented the largest transaction by value in 2019. The 268-key hotel was sold for THB2.25 billion to TA Global Berhad from Malaysia,” said the report.
“Both international and domestic investors continued to show keen interest in acquiring hotels in Thailand, particularly Bangkok, Phuket, Samui and Chiang Mai.
“However, a limited number of investment-grade hotel assets were put up for sale in 2019 after two record years in 2017 and 2018,” said Chakkrit Chakrabandhu Na Ayudhya, Executive Vice President for Investment Sales, JLL Hotels and Hospitality Group Asia.
Asides from the shortage of available hotel stock for sale, delays in some hotel investment transactions were another factor contributing to the decline in hotel investment volume last year, he added.
“There were a few notable hotel deals where the sale and purchase agreements were signed last year but the ownership is slated to transfer in 2020,” Mr Chakkrit explained.
“Some of these deals are significant in value and will give a considerable boost to the hotel investment volume in 2020,” he added..
Despite strong interest, investors adopt a more cautious approach
According to STR Global, the average RevPAR (revenue per available room) for hotels in Thailand in the year to date Nov 2019 declined by 5.6%.
“The decline in hotel performance last year in several resort destinations made some investors more cautious in their assessment. However, long-term strategic investors who understand the cyclical nature of the tourism industry remained focused with Thailand being known as one of the most resilient markets in Asia,” Mr Chakkrit explained.
Mike Bachelor, CEO for JLL Hotels and Hospitality Group Asia, said, “Whilst foreign investors were still active in their search for investments in Thailand, several groups were monitoring their entry points closely due to the appreciation of the Thai baht. Nonetheless, Thailand offers relatively higher yields than the rest of key markets in Asia and from a price per key standpoint is still significantly cheaper.”
At the time of going to press, JLL expected hotel investment activity in Thailand to rebound in 2020 and increase to around B10-12bn.
Asia at a glance
Driven by multiple large transactions across key markets, hotel investment volume in Asia rose from US$7.2bn in 2018 to US$12bn in 2019. Japan remained the region’s most liquid hotel investment market, witnessing US$4.9bn, a 109% increase from 2018.
Singapore saw the largest growth in hotel investment volume, recording a tenfold increase from US$129 million in 2018 to US$1.4bn in 2019. Thailand contributed 9% and 1% to Asia’s total investment volumes in 2018 and 2019, respectively, the report added.