Investments in Thai hotels drop

BANGKOK, 5 February 2020:  Hotel investment volume in Thailand declined to THB3.7 billion in 2019 from the record year of THB20.5 billion in 2018.

Lower availability of investment-grade hotel assets that were put up for sale contributed significantly to the significant drop in the hotel investment volume last year, according to JLL Hotels and Hospitality Group.

“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), Dusit Suites Hotel Ratchadamri Bangkok (formerly Anantara Baan Rajprasong) 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.

“Both international and domestic investors continued to show a keen interest in acquiring hotels in Thailand, particularly Bangkok, Phuket, Samui and Chiang Mai,” said JLL Hotels and Hospitality Group Asia executive vice president for Investment sales, Chakkrit Chakrabandhu Na Ayudhya. “However, a limited number of investment-grade hotel assets were put up for sale in 2019 after two record years in 2017 and 2018,” 

Aside 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.

“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,” Chakkrit explained. “Some of these deals are significant in value and will give a considerable boost to the hotel investment volume in 2020.”

Despite the strong interest, investors are adopting a more cautious approach.

According to STR Global, the average RevPAR (revenue per available room) for hotels in Thailand in the year to date November 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 on Thailand being known as one of the most resilient markets in Asia,” said Chakkrit explains.

JLL Hotels and Hospitality Group Asia CEO Mike Bachelor 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 Thai Baht appreciation. 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.”

JLL expects hotel investment activity in Thailand to rebound in 2020 and increase to around THB10 to 12 billion.

Asia at a glance

Driven by multiple large transactions across key markets, hotel investment volume in Asia rose from USD7.2 billion in 2018 to USD12.0 billion in 2019. Japan remained the region’s most liquid hotel investment market, witnessing USD4.9 billion, a 109% increase from 2018.

Singapore saw the largest growth in hotel investment volume, recording a 10 fold increase from USD129.0 million in 2018 to USD1.4 billion in 2019. Thailand contributed 9% and 1% to Asia’s total investment volumes in 2018 and 2019, respectively.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries. JLL is the brand name and a registered trademark of Jones Lang LaSalle Incorporated.