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Hotel Investments Paying Off

By on Jan 05, 2016 in Hotel-Tourism, Property News

Return on investment (RoI) for hotels in Bangkok picked up in 2015, while that of other property types was either down or stable, according to a survey by the Thai Appraisal Foundation.

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TAF board member Wason Kongchantr said RoI for four- and five-star hotels in the capital rose to 8-10% last year from 7-9% in 2014, with three-star RoI rising to 7-9% from 6-8%.

According to the Tourism and Sports Ministry, international tourist arrivals from January-October 2015 increased by 24.8% year-on-year to 24.4 million.

Tourism revenue jumped 27% to 1.16 trillion baht.

“The hotel sector slowed down in 2014, when the number of international tourist arrivals dropped by 6.5%,” Mr Wason said.

“The sector’s growth resumed last year thanks to a tourism boom led by the Chinese.”

Shopping malls were another sector registering a high RoI — 8-10% for those in the central business district and 7-9% for non-CBD malls. Those figures remained stable.

RoI for shopping malls has been steady since 2014, Mr Wason said.

He cited the economic slowdown and higher household debt as factors depressing consumer spending.

The office sector generated a stable ROI of 6-8% in the CBD area and 5-7% in non-CBD areas.

RoI for Grade A office space in the CBD is likely to pick up in response to new demand spurred by regional economic integration, existing high occupancy rates of more than 95% and limited new supply causing rents to rise in the future.

Driven by demand from the Asean Economic Community, which kicked off last Thursday, the serviced-apartment sector is expected to see a similar trend to office space with a possible rise in rents, although RoI was stable from 2013-15 for Grade A properties and just picked up last year for Grade B.

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Source: Bangkok Post – 5 January 2016

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