BANGKOK, 15 December 2021: Investment volume in Thailand’s hospitality sector in 2021 should grow more than five times the volume witnessed in 2020, reaching THB 12 billion by year-end, JLL predicts.
Year to date, 13 properties have been sold, totalling THB5 billion of combined value, compared to four properties worth THB1.9 billion in total sold last year.
JLL’s data tracks sale transactions of hospitality assets that are operated to international standards. These include investment-grade hotels, resorts, and serviced apartments in Bangkok and Thailand’s key leisure markets.
JLL Hotels & Hospitality Group executive vice president, investment sales, Asia Chakkrit Chakrabandhu Na Ayudhya says: “Hotel investment activity in Thailand has recovered to the pre-Covid-19 level. We anticipate the investment volume this year to reach THB12 billion if ongoing deals with THB7 billion of combined value are completed by year-end as expected. This means the total investment volume for 2021 could surpass the 10-year average of THB10 billion per annum witnessed between 2009 and 2019.”
“At JLL, we have recently closed the sale of 138-key Citadines Sukhumvit 23 Bangkok and are working on more than 10 hotel deals with a combined value of over THB 17 billion. Of these, two are likely to be concluded by the end of this year,” he continues.
Buoyant hotel investment activity this year has been driven by the availability of investment-grade assets for sale, strong demand from investors, and the narrowing gap between buyers and sellers’ price expectations, according to JLL.
Based on observations by JLL, luxury and iconic hotel assets offer little or no discount due to their irreplaceable nature and owners’ profiles. In addition, owners of these hotels are generally less affected by the pandemic compared to others.
JLL’s observations also show that prices of investment-grade assets in Bangkok have relatively remained firm, compared to resort markets, and bigger discounts are witnessed in second-tier markets, especially in midscale properties.
Considering transactions completed so far this year, 90% of the buyers are local wealthy families, well-capitalised corporates and international private equity funds establishing or expanding their hotel portfolio. By transaction value, foreign investors this year are expected to account for 62% of the hotel buyers in Thailand when taking into account the remaining hotel deals that are likely to be closed by year-end.
While JLL expects to see continued interest from foreign investors in the coming years, the firm also believes that the ease of restrictions on cross-border travelling will encourage more participation from foreign investors in 2022, leading to higher competition for quality assets.
