Hotel sales are expected to increase dramatically this year due to the emergence of more real estate investment trusts (REITs), which will help pour liquidity into the hotel investment market, says property consultancy Jones Lang LaSalle (JLL).
Andrew Langdon, executive vice-president for Thailand and Indochina in JLL's hotel and hospitality group, said there will be fewer landmark deals but hotel sales will remain buoyant, with a greater interest in small ones valued between 200 million and 1 billion baht.
"Thailand has experienced a series of crises in the past decade that have caused volatility in the defined hotel market, especially in Bangkok," he said. "The country remains a resilient market with an overall increase in tourist arrivals. Hotel investors are confident in the country, particularly for resort destinations that have seen a limited impact from any volatility caused by the political demonstrations in Bangkok."
Mr Langdon said REITs will have a significant effect on the hotel investment market. Their investment flexibility compared with property funds will improve liquidity and the volume of hotel transactions.
REITs can invest in both finished and ongoing projects and obtain loans to invest in projects, while property funds can invest only in completed projects.
JLL expects favoured hotel investment locations will continue to be gateway city Bangkok and well-established resorts Phuket and Koh Samui.
In recent years, Pattaya has attracted increasing interest from hotel investors on the back of growing visitor numbers.
The consultancy firm said Chiang Mai remains a challenging hotel market on the back of rising supply, yet the northern city has benefited greatly over the last two years from an exceptionally strong increase in international travellers, especially from China.
Mr Langdon said JLL advises any investor wishing to invest in a hotel in Chiang Mai to seek advice from experienced advisers and to carefully conduct a project feasibility study.
JLL revealed that hotel investment volume in East Asia and Southeast Asia totalled US$7.5 billion at the end of last year, up by 218% from 2012.
Singapore, Japan and China led the region’s growth, with Japan topping overall investment volume at $2.7 billion, up by 480% from 2012, as hotel trading performance improved in line with the expansion of the domestic economy.
Last year was also remarkable for the Singaporean hotel market, with transaction volumes of $2 billion, while China recorded $1.1 billion worth of transactions. Other markets with strong growth were Hong Kong ($487 million, up by 19% from 2012), Thailand ($337 million, up by 31%) and the Maldives ($268 million, up by 614%).