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Hotel investment to remain strong this year, JLL forecasts

Hotel investment to remain strong this year, JLL forecasts

MONDAY, January 30, 2017

THAILAND’S hotel investment activity remained robust in 2016, with more than 10 hotels and hospitality assets sold in Bangkok and major provincial destinations, says JLL, a major investment-management company specialising in real estate.

Five assets were brokered by JLL on behalf of the sellers. However, investment volume fell 15 per cent from 2015 to Bt9.6 billion because of the lack of large assets being offered to the market. 
This year will see a big jump in investment volume as the Bt10.8-billion sale of Swissotel Nai Lert Park is scheduled for conclusion this year, according JLL’s hotels and hospitality group.
“Investment appetite by both local and foreign investors in Thailand’s hospitality market has [shown] no signs of subsiding as these investors have remained upbeat on long-term fundamentals in this ever-resilient market,” said Mike Batchelor, managing director of investment sales in Asia for that group.
Data from the Tourism Authority of Thailand suggest that the growth of inbound visits to Thailand has been consistent, with a 10-year compound annual growth rate of 8.9 per cent. 
The number of international visitor arrivals breached the 30-million mark for the first time last year and is expected to reach 35 million in 2017 despite the crackdown on zero-dollar tours that has had an impact on the number of arrivals from China since the latter part of 2016.

Bangkok leads the pack 
Bangkok was the star performer in Thailand, with hospitality transactions accounting for around 50 per cent of the total volume last year. 
Some of the key deals recorded over the year across the city include the sales of Eight Thonglor (including the former Pan Pacific Residences, since rebranded as Akyra Thonglor), Liberty Garden Hotel and Park 24 Condominium in Sukhumvit, which will be rebranded and managed as serviced apartments by Ascott.
Other transactions were spread across major tourism destinations including Pattaya, Phuket, Phang Nga, Koh Samui, Hua Hin and Chiang Rai, plus additional transactions in the gateway city of Nakhon Ratchasima and the industrial town of Sri Racha.
While most of the hotel deals last year were transacted by Thai investors, institutional investors from Hong Kong and Singapore were also active purchasers, accounting for around 45 per cent of the total transaction volume.
“Interest from both domestic and regional investors [was] strong in 2016, a trend that is expected to continue into 2017,” Batchelor |said.
“More Asian corporates are looking to place large capital reserves into alternative investment classes in some of Thailand’s real-estate sectors that enjoy healthy trading performance and returns,” he said. 
“Buoyed by strong long-term growth prospects for the country’s tourism industry, some of these corporates have [shown] keen interest in the hospitality sector, as evidenced from strong levels of bids for some of sought-after hotel assets currently offered for sale in Thailand.”