Thailand’s Hotel Market Lures Investors

According to a recent report from global real estate group JLL the hotel investment market in Thailand remains buoyant and attractive to both domestic and foreign real estate players. It has improved steadily following the market slump around the Global Financial Crisis in 2009. Hotel transaction volumes across the country tracked by JLL’s Hotels and Hospitality Group reached approximately THB 10.9 and 13.9 billion in 2013 and 2014 respectively and accounted for approximately 4.1% and 5.7% of all hotel transactions in the Asia Pacific region.

Investment Destinations:

Investors are interested in acquiring hotels in Thailand for a number of reasons including lower capital values than in more developed markets such as Singapore or Hong Kong, relatively higher yield returns (whether at the outset of the investment or the opportunity for the incoming investor to add value) and the long term prospects of Thailand’s tourism industry. The initial investment destinations for investors tend to cover the main Bangkok, Phuket and Samui markets, followed by Chiang Mai, Pattaya, Khao Lak and Krabi as secondary markets which are also attracting some investor interest.

Bangkok remains Thailand’s most attractive hotel investment destination due to its position as one of the most visited cities in the world, attracting both leisure and corporate travelers all year round. Investor demand for assets in Bangkok has driven asset prices ever higher in spite of a significant amount of new supply of hotel rooms over the last few years as evidenced by a transaction that JLL advised on in mid-2014 of a hotel in the prime Sukhumvit area.

Phuket has also proven to be an extremely buoyant market in recent years for resort transactions with JLL having advised on nine resorts deals for a combined volume of approximately THB 14.8 billion. Investors are attracted to Phuket due to the significant and growing direct air links available into Phuket International Airport which insulates the market from disturbances in Bangkok. For example, in 2014, when the Bangkok protests caused visitor arrivals to drop by 11.3% year-on-year compared to 2013, Phuket’s visitor arrivals were less affected and remained flat, moderately growing by 0.2%. Expansion of the Phuket airport capacity, additional road infrastructure plus the ability to achieve a higher yield return as compared to Bangkok further adds to Phuket’s allure as one of Asia’s investment hotspots.

Samui can be described as the ying to Phuket’s yang as its limited airlift and high airfares have shaped the market into a more ‘boutique’ destination as opposed to the ‘mass tourism’ characteristic of Phuket; resulting in some of the highest RevPARs (Revenue Per Available Room) in Thailand. The emergence of Surat Thani as a low cost airport hub has also increased access to Samui and supported the growth in the number of visitors to the island. This, combined with a limited supply of new hotels under construction (only one major resort opened on Samui in 2014), presents a favorable environment for hotel investors investing in Samui. JLL currently has a number of resorts in Samui that are being marketed for sale which have received strong interest from investors.


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