Hotel investments in Thailand will likely set a record this year despite a year-on-year decline in the previous year, according to a property consultant.
In baht terms, hotel investments fell to 9.6 billion in 2016 from 11.3 billion in 2015 but this year will likely see the total reach 20 billion baht, according to JLL's Hotels and Hospitality Group.
The firm's projection is based on a number of hotel sales likely to be concluded this year including the sale of the 10.8-billion-baht Swissotel Nai Lert Park.
According to JLL, Thailand saw robust investment activity in 2016, with more than 10 hotels and hospitality assets sold in Bangkok and major provinces. Of this, five assets were brokered by JLL on behalf of the sellers.
However, the volume was down by around 15% from last year, due largely to a lack of large hotels available for sale following the Swissotel Nai Lert Park deal to be completed in 2017.
Some of the key investment transactions recorded over the year were hotel sales in Bangkok, such as Eight Thonglor (formerly Pan Pacific Residences, since rebranded as Akyra Thonglor) and Liberty Garden Hotel.
Other transactions spread across major tourism destinations including Pattaya, Phuket, Phang Nga, Koh Samui, Hua Hin and Chiang Rai. Other deals took place in the Northeast gateway city of Nakhon Ratchasima and the industrial town of Sri Racha.
While most of the hotels sold last year were bought by Thais, institutional investors from Hong Kong and Singapore were also active buyers, accounting for around 45% of the transaction volume.
"Overall, investors remain upbeat in this ever-resilient market and keen on Thailand's longer-term fundamentals," said Mike Batchelor, managing director of Investment Sales Asia, JLL's Hotels and Hospitality Group.
According to Tourism Authority of Thailand data, the increase in the numbers of visitors to Thailand has been consistent with a 10-year compound annual growth rate of 8.9%. Total international arrivals reached the 30-million mark for the first time in 2016 and are expected to reach 35 million in 2017 despite the crackdown on zero-dollar tours which has impacted Chinese arrivals since the second half of 2016.
"Interest from both domestic and regional investors has remained strong this year. 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 performances and returns.
"Buoyed by strong long-term growth prospects for the country's tourism industry, some of these corporates have keen interest in the hospitality sector, as evidenced by strong levels of bids for some of the sought-after hotel assets currently offered for sale in Thailand," said Mr Batchelor.
JLL also expects real estate investment trusts (REITs) to spur investment activity in Thailand's hotel markets.
"Listed investment vehicles have been well established in Thailand with property funds, REITs and similar trust securities having a combined market cap of some 650 billion baht and accounting for some 5% of the SET [Stock Exchange of Thailand]'s market cap.
"Continued liquidity in the domestic market and a strong appetite for quality yield offerings on the back of relatively low interest rates and a low-inflation environment is expected to further drive REIT activity in 2017," said Mr Batchelor.