Hotel investment sales in Singapore doubles in volume to $828 mil from a year ago: CBRE

By Charlene Chin

/ EdgeProp Singapore |

September 27, 2019 10:00 AM SGT

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SINGAPORE (EDGEPROP) - Hotel investment sales in Singapore has achieved $828.3 million in 1H2019, twice the volume recorded in 1H2018. Meanwhile, revenue per available room (RevPAR) clocked US$167.24 million ($231 million) for the 12 months ended July 2019.

Excluding partner buy-out transactions, a total of four properties were transacted in 1H2019: Ascott Raffles Place, Ibis Novena, Bay Hotel and Claremont Hotel. In comparison, transactions recorded in 1H2018 were mostly in the smaller and economy segments.

“Despite strengthening global headwinds and slower economic growth, interest in hotel assets [in Singapore] is expected to remain strong among both foreign and local investors,” CBRE highlights in its report released on Sept 25.

Ascott Raffles Place (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Meanwhile, tourist arrivals to the city-state has remained strong. July saw its strongest results, when occupancy rose above 90% for the first time amid steady growth in visitor arrivals. CBRE expects performance to remain robust, driven by ongoing efforts by local tourism bodies to improve their offerings.

Asia-Pacific overview

Across the Asia-Pacific, results are muted. Hotel transaction volume in the region for the 12 months ended 2Q2019 registered US$10.9 billion, a decline of 23% over the same period of 2017/2018. CBRE observed compressed yields across the region that stayed at low levels.

In China, Dalian Wanda Group disposed of a major hotel portfolio in 1H2018, resulting in a large fall in transaction volume in the country.

In contrast, Singapore, Australia and Hong Kong continued to report positive investment turnover growth for the 12 months ended 2Q2019.

Transaction volume in Australia rose in 2Q2019, achieving A$370 million ($345 million) in sales volume. The largest deal was Salter Brothers’ purchase of Next Hotel in Brisbane’s CBD for A$150 million.

All the transactions in Australia during the quarter involved local purchasers, which CBRE attributes to a lack of stock for sale.

Tourist arrivals in the region

Across the Asia-Pacific, Vietnam continues to record strong growth momentum in terms of tourist arrivals. Although growth fell to 7.5% y-o-y in 1H2019, slower than its previous years, Vietnam remains one of the fastest-growing tourism markets in the region, notes CBRE. The country registered close to 8.5 million visitors during the first six months of the year.

In particular, Hanoi, capital of Vietnam, has emerged as one of the region’s top performers, logging RevPAR growth of 9% in VND for the 12 months ended July 2019.

Relaxed visa policies, improvements to infrastructure and flight connectivity has overall facilitated growth for the country, says the research consultancy.

Meanwhile, Thailand’s recent solid performance is losing momentum. Visitor arrival growth declined in 1H2019 to 1.3% y-o-y, with 19.7 million visitors.

The numbers have prompted the Tourism Authority of Thailand (TAT) to revise its full-year forecast down to 40.2 million visitors, from 41.3 million. Growth forecasts for tourism revenue have also experienced a downward revision to 9.5% y-o-y, from 10% y-o-y previously.

Thailand’s weaker performance is believed to be due to the stronger baht, general elections in March and a boat accident in 2018 that adversely impacted Chinese arrivals.

To prevent over-reliance on the Chinese market, the TAT wants to switch its focus to visitors from India, a steadily growing source market. It is also planning on attracting health-conscious tourists as a niche marketing angle.

The outlook for Hong Kong remains bleak for the remainder of the year. CBRE forecasts the average daily rate to weaken significantly in 2H2019 on the back of the socio-political unrests, which led to a 12.6% y-o-y plunge in RevPAR (in USD) for July.

In 1H2019, Hong Kong received 14.9 million visitors, registering a 7.7% y-o-y growth. It was one of the top performing markets in the region during the first half of the year, registering RevPAR growth of 2.1% y-o-y (in USD).

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