Hotel investment boom in SE Asia

Published: 30 Apr 2013 
 Bangkok Post 

Investors are turning their attention to emerging markets in Southeast Asia again, on the back of robust hotel transaction volumes in Asia which hit US$620 million in the first quarter of 2013, up 190% from the same period last year in 2012, according to international real estate consulting firm Jones Lang LaSalle.

"Rising visitor arrivals, robust trading performance and positive market dynamics have put emerging Southeast  Asian markets such as Vietnam, Cambodia and Myanmar back into the investment spotlight," said Tom Oakden, executive vice president of Investment Sales for Jones Lang LaSalle's Hotels & Hospitality Group.

The growth in air travel in Southeast Asia, along with upgraded infrastructure, has enhanced the ease of travel and improved links to the rest of Asia. This is evident in the double digit tourism growth witnessed in Vietnam (15%), Cambodia (25%) and Myanmar (55%) in 2012, when compared with 2011.

"The affordability factor and capital growth prospects some of these markets offer when benchmarked against other more mature Asia gateway cities that have seen huge appreciation in recent years is also a driving factor," he said.

The Strand Hotel is one of the best-known hotels in Yangon, which is getting about 1,000 new rooms in 2013. (Bloomberg Photo)

Great potential lies in the Myanmar hotel market, which has benefited from a demand-supply imbalance to become one of the best performing hotel markets in Asia, where operators are enjoying growth in room rates from leisure and corporate travellers in hotspots like Yangon and Mandalay. 

International hotel companies are doing their best to secure opportunities with domestic owners and developers, including Accor, which is developing three newly built hotels in Myanmar.

However, until further foreign investment law is enacted and economic reform takes shape, it will be challenging to establish genuine hotel investment sales, Mr Oakden said. 

Vietnam's economy is in recovery mode and the medium to long term potential of the country as an investment destination is being recognised. This is evident in the sale of two Life Resorts properties in Hoi An and Quy Nhon to the Minor Hotel Group in February, Mr Oakden added.

Neighbouring Cambodia is on the cusp of real economic and tourism growth, with rising visitor arrivals and increasing foreign direct investment from countries such as South Korea, Vietnam and China. With limited hotel supply in the key cities, the country is attracting the attention of both domestic and regional investors and developers, he said.