Singapore has been ranked the most active hotel investment market in Asia Pacific, accounting for S$1.02 billion of the S$2.6 billion transaction volume in the region, according to Jones Lang LaSalle’s (JLL) Hotel Investment Highlights 2011.
JLL said in its report that Singapore’s sales volumes in the first half already represent the highest annual level since 2006. Many investors focused on hotel fundamentals, and visitor arrivals were expected to increase by 46.6 percent over the next five years, exceeding room supply, which has an annual average of 7.6 percent between 2010 and 2012.
Unlike several other countries, Singapore has a proven track record of delivering on its visitor projections. Many investors are also aware that Singapore’s hotel room rates are much cheaper than in other cities across the region, particularly Hong Kong and Tokyo.
Meanwhile, the trading environment in the Asia Pacific region has experienced a significant turnaround over the past 18 months, which resulted in strong demand for hotel assets during H1 2011.
Approximately S$2.6 billion of transaction volume was recorded across the region in the first half of the year, up 58.5 percent over the same period last year. Asia saw the most significant increase in activity, accounting for 81.9 percent of the total volume, up from 67 percent last year.
With few factors affecting the horizon, especially in gateway cities, this has led to many activities in the market, as most investors plan to capitalise on trading and the long-term projected growth of the tourism and hotel sector.
While the strong economy has underpinned investor demand, the willingness of buyers to meet the market has resulted in increased transaction activity across Southeast Asia during the first half of the year. This has led to new pricing benchmarks being set above the 2007 peak.
The sale of the Crowne Plaza Changi Airport hotel for S$628K per key, which was brokered by JLL, was one example of the new pricing norm. The 320-room hotel has generated strong cash flows since it began operations in 2008.
Source: PropertyGuru.com
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