Property developers in bed with hotel brands

October 12, 2017 by  
Filed under News, Thailand

BANGKOK, 12 October 2017: Southeast Asia’s real estate love affair between property developers and hotel brands is morphing into a feeding frenzy, according to C9 Hotelworks’ new SE Asia focused Hotel Residences Market Trends.

With nearly 100 mainstream hotel residence projects and over 21,000 units completed, the next three years will see sector boldly expanding into new territory.

The reports states that between 2018 and 2020 new completed units will represent a massive 83% increase over existing supply.

The Top five pipeline project locations in order of volume are Danang, Phuket, Kuala Lumpur, Bali and Bintan.

“Looking at changing trends, if we’d roll back the clock 18 to 24 months, urban projects were part of a shifting landscape, but today investment buyers are back heavily in resort destinations, especially Vietnam,” said report author Bill Barnett.

The C9 Hotelworks’ report indicates that market-wide average sales price per square metre in the region (excluding Singapore) is US$5,713 in urban areas and US$3,207 in resort destinations.

“Examining the geographic source of property buyers, Thailand’s more mature market is deeper with foreign purchasers, while Indonesia and now Vietnam are tracking an onslaught of domestic demand, back of a skyrocketing consumer class.”

As for the attraction of hotel branded real estate C9 Hotelworks latest research reflects that market-wide premiums of recognized hospitality groups range between 25 to 35% versus independent properties. Chains that are most active includes Marriott, Banyan Tree, Hyatt, Melia, Minor and Mövenpick along with brands that have used hotel residences to spur their pipelines such as BHM Asia and Alila.

Despite the growth storyline, the report warns both developers and property buyers over the onslaught of projects offering high levels of guaranteed returns over sustained periods.

“Danang is one location that has all the signs of a recipe for disaster with recurring returns being promoted at 10.5% on a long-term basis.”

Compounding the outlook is the strong take up in the domestic segment with purchasers leveraging debt at extraordinary levels.

“If returns fail to materialize at the promoted numbers, developers will be unable to fund returns, buyer will forfeit units to banks and market values could evaporate. It could be a perfect storm and wider regulation for consumers over guaranteed returns across Southeast Asia is sorely needed.”

(Source; C9 Hotelworks)

To download the report CLICK.

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