High occupancies add to Phuket’s appeal

More hotel investment transactions will be completed in the second half of this year, mainly in Phuket where occupancy rates have been strong, says Robert McIntosh, executive director of CBRE Hotels in Asia-Pacific.

He forecast the value of hotel investment transactions in 2011 would be higher than last year’s total of 5 billion baht, after no transactions in 2009.

In the first five months of 2011, transactions included the acquisition of Laguna Beach by CDL, and the 50-room,four-star Layana Resort on Koh Lanta by the Bangkok-based retail operator MBK from a private foreign investor.

The transactions in 2010 involved five properties: four in Phuket and one on Samui. In Phuket, Dusit International bought Dusit Laguna from Laguna, a private company bought the Novotel Beach from the SETlisted developer Natural Park,and Hotelcorp bought the Manathai Resort on Surin Beach from a foreign owner.

Another acquisition in Phuket involved Yamu, acquired by a joint venture between Como Hotels and Resorts and the owner of Alila Cha-am from a foreign investor.

“The reason why hotels in Phuket were acquired the most was that Phuket was very attractive for hotel investment for both seller and buyer, with a very good performance in occupancy rate,”said Mr McIntosh.

In the first quarter, average hotel occupancy in Phuket was 82.9%, up from 82.3% in the same period last year, the best performance in Thailand, he added.

The story was totally different on Samui as the market was very quiet and the only transaction was a financial consolidation. Baan Taling Ngam Resort, formerly owned by Lehman Brothers, was bought by the Srivikorn family. It will be operated by InterContinental starting late this year.

“Three- to four-star hotels are very attractive for investment as they generate more return with steady income,”he said, adding that in Thailand, initial rates of return averaged 9%.

Mr McIntosh said the last really big year for hotel investment in Thailand was in 2006. Activity was sluggish in 2008 as financial institutions were reluctant to lend after hotel occupancy dropped. Hotel investment everywhere was frozen until early 2010, when recovery was seen in most of Asia-Pacific.

The second half of 2010 was better than the first half. The most active market was Australia as bankrupt hotels were forced to sell by banks.

Big hotel buyers in Australia included the Government of Singapore Investment Corporation (GIC) and the Singapore-based private fund City Developments Limited (CDL). Also active was the Thai liquor tycoon Charoen Sirivadhanabhakdi.

In the first five months of 2011, Hong Kong was Asia’s best performer with 90% hotel occupancy, up from 85% in 2010, followed by Singapore with 86%,up from 85%.

“Hotels in Hong Kong and Singapore are very interesting due to high occupancy rates. Everyone wants to acquire one but no one wants to sell,” said Mr McIntosh, who is based in Singapore.

In Asia, Singaporeans were the biggest investors in hotel businesses, going to Japan, China, Australia, India and Thailand. They were by Hong Kong investors,in China and Thailand. Chinese investors went to Europe, Taiwanese mainly in China, while Thai investors sought properties in Australia and the US.

Mr McIntosh said that by next year there would be more hotels in Europe and North America being forced to sell as financial institutions complete reorganisation in 2012.

Property-sales activity has rebounded in Phuket, according to global property-services firm CB Richard Ellis (CBRE).

CBRE, which tracks sales through its Phuket office and research team, said there were more sales and active enquiries in the first quarter of this year than in 2010, signaling a recovery in the market.

CBRE (Thailand) chairman David Simister told a recent conference on resort markets that Phuket remained the pinnacle destination for second-home purchases in Southeast Asia, with the villa market topping the charts in terms of the range of high-end developments and the prices paid.

Neighbouring countries’ resort markets do not have the same international desirability as Phuket, he said. The Vietnam market has a significant number of new projects, but is only really attractive to domestic buyers. Bali, Phuket’s main competitor, attracts neither the same volume of tourists nor, more importantly, high-income individuals and property buyers.

Simister said the period from 2008 to the third quarter of 2010 saw a slowdown in the market triggered by the global financial crisis, although Phuket prices held firm and there were very few distressed sales.

However, there was a clear shift from off-plan sales to resale units. Within the resale market, hotel-branded villa products with a good reputation and good management were the top performers, with Andara being the most desirable.

As the most successful hotel-branded sales project on the island, Andara has delivered both quality and luxury, with high attention to detail and immaculate standards, all of which ticked the right boxes for buyers, Simister said. CBRE was delighted to be involved in the success of Andara, advising clients on six transactions. The development has now sold out.

A recent Phuket Report from CBRE Research shows that the latter part of 2010 was the turning point for the villa market, with activity increasing in the luxury sector. The high season continued to drive interest, with more than 20 villa transactions in the first quarter of 2011, indicating increased buyer confidence.

However, developers cannot become complacent. While the market shows signs of recovery, the report says developers should realise that the number of buyers is smaller, the buyer profile has changed and the criteria for successful sales is much more precise.

CBRE research shows that sales activity is now dominated by end users, rather than by investors who buy for capital appreciation and rental returns.
 
“We are seeing many more inquiries and increased sales from high-net worth individuals, especially from Russia and India,” said CBRE Phuket’s director of resort residential sales Prakaipeth Meechoosarn. These buyers are successful business people and entrepreneurs; they are financially independent and are typically seeking large four- and five-bedroom pool villas that offer high quality fittings and finishes in a good location with ocean-front views. These buyers want to take advantage of a luxury tropical lifestyle without the forced restrictions of leaseback schemes or compulsory rental pools, he said.

At the other end of the market, CBRE also noted an increase in demand for entry-level villa products priced between Bt5 million and Bt10 million. Demand in this segment is predominately from European residents who prefer completed or significantly completed developments.

In all market segments, the west coast of Phuket is the preferred location. Some buyers are opting to move to Phang Nga to obtain ocean-front property rather than purchasing inland or on the island’s east coast, the firm said.

Four Points by Sheraton with its timeless and stylish comfort offering, has proved a huge hit for Starwood worldwide, because of the “halo” of the iconic Sheraton brand.  While Aloft, the sizzling tech-savvy brand that has rocked the U.S. hospitality industry, is Starwood’s design-led, social-experience brand that has enjoyed the fastest ramp-up of any brand in hotel history.

“Starwood has responded to Thailand’s need for mid-market lodging by working with proven development partners to open best-in-class hotels throughout this dynamic market,” said Wayne Buckingham, Regional Vice President, Thailand, Vietnam and Cambodia.  “We are delighted that our expansion plans are going from strength to strength in Thailand with the signing of Aloft and Four Points by Sheraton Hotels in Patong, Phuket.

“We are delighted to have Starwood on board for our two upcoming hotels. The process of selecting and appointing the hotel operators has been well assisted by the CB Richard Ellis team in Phuket. We are upbeat on the hotel market in Patong and believe both Aloft and Four Points by Sheraton brands are good match for the location. Patong lacks mid-tier international branded hotels which offer both affordability and quality.” Said Mr. Wittaya Thaweewongsap, Owner, Fisherman Harbour Company Limited

“With Phuket achieving a record number of foreign tourist arrivals in 2010, we are confident about the future of Phuket’s hotel market. Phuket International Airport is also undergoing a major expansion which will double its capacity. The airport expansion will help generate growing tourists demand in the mid-market and those looking for quality and value for money accommodation which both Aloft and Four Points by Sheraton deliver,” said Ms. Khanitha Jarukirati, Associate Director of Investment and Resort Land at CB Richard Ellis.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for December 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi and Don Muang airports were 1,642,901 in December 2010 compared to    1,544,158 in December 2009, an increase of 6% Y-o-Y and an increase of 71% on December 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were 581,182 in December 2010 compared to 584,935 in December 2009, a decline of 1% Y-o-Y but an increase of 67% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 214,056 in December 2010 compared to 171,016 in December 2009, a 25% increase Y-o-Y and represents a 53% increase on December 2008 figures. Domestic passenger disembarkations were 183,277 compared to 187,596 in December 2009, a decline of 2% on December 2009 but an increase of 58% on December 2008 figures.

It should be noted that tourist arrivals in December 2008 were impacted by political unrest that resulted in the closure of Suvarnabhumi airport.

The 494 bedroom, Park Lane property (operated by JW Marriott) represents the largest ever single asset hotel transaction (by sale price) in Europe.

The iconic hotel has a unique place in the London 5-star market and as such attracted wide investor interest. Sahara India Pariwar acquired the hotel from RBS on the 30th December 2010. The transaction occurred in the same year that CBRE Hotels also sold the single largest hotel in Europe (by number of bedrooms) for many years – London’s Cumberland Hotel, also located in Mayfair.

CBRE Hotels is an international service provider focused exclusively on hospitality with dedicated teams in America, Europe, Middle East and Asia Pacific. CBRE Hotels offer a diverse range of service lines to help clients maximise the value of their investments, including transaction management, debt and equity placements, development, asset management and valuation and advisory services. The company also provides strategic direction and operational advice, which may include positioning the property for sale, selecting the appropriate brand, evaluating management agreements and assisting in refurbishment or redevelopment.

Locally in Thailand, CBRE has also successfully selected a hotel operator for Ashlee Company Limited, the owner of a new hotel in Phuket. The 108-key hotel which soft opened in December 2010 is managed by Centra, the latest hotel brand by Centara Hotels & Resorts. CB Richard Ellis provided strategic advice on the selection of the hotel operator and was closely involved in the hotel management contract negotiations, providing its in-depth understanding of the hotel industry for the hotel owner to select the most effective brand to operate their hotel.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for November 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi and Don Muang airports were 1,470,799 in November 2010 compared to   1,369,416 in November 2009, an increase of 7% Y-o-Y and an increase of 2% on November 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were 544,974 in November 2010 compared to 554,903 in November 2009, a decline of 2% Y-o-Y and a decline of 1% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 152,920 in November 2010 compared to 115,134 in November 2009, a 33% increase. This represents a 35% increase on November 2008 figures. Domestic passenger disembarkations were 161,162 compared to 162,398 in November 2009, a decline of 1% on November 2009 but an increase of 6% on November 2008 figures.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for October 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi and Don Muang airports were 1,395,792 in October 2010 compared to   1,319,329 in October 2009, an increase of 6% Y-o-Y and an increase of 5% on October 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were 557,886 in October 2010 compared to 567,733 in October 2009, a 2% decline but an increase of 3% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 137,455 in October 2010 compared to 91,030 in October 2009, a 51% increase. This represents a 72% increase on October 2008 figures. Domestic passenger disembarkations were 162,985 compared to 157,777 in October 2009, an increase of 3% on October 2009 and an increase of 9% on October 2008 figures.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for September 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi and Don Muang airports were 1,196,267 in September 2010 compared to  1,098,827 in September 2009, an increase of 9% Y-o-Y and an increase of 21% on September 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were 466,670 in September 2010 compared to 501,267 in September 2009, a 7% decline but an increase of 23% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 113,876 in September 2010 compared to 71,544 in September 2009, a 59% increase. This represents a 121% increase on September 2008 figures. Domestic passenger disembarkations were 132,138 compared to 127,963 in September 2009, an increase of 3% on September 2009 and an increase of 35% on September 2008 figures.

CB Richard Ellis provided strategic advice on the selection of the hotel operator and was closely involved in the hotel management contract negotiations, providing its in-depth understanding of the hotel industry for the hotel owner to select the most effective brand to operate their hotel.

“We are excited at the prospect of bringing this new hotel brand to Phuket for the first time.  With Centra managing the hotel and the improved numbers of tourist arrivals in Phuket, we are confident that this hotel will have a bright future,” said Ms. Khanitha Jarukirati, Associate Director of Investment and Resort Land at CB Richard Ellis. 

CB Richard Ellis has a dedicated team with strong hotel real estate experience to provide a comprehensive range of services including hotel acquisition and disposal, land search for hotel or resort development, valuation, operator selection and evaluation, strategic advisory, development feasibility analysis, and market research throughout Thailand.

Located at the heart of Patong, on the city’s second road and within walking distance of the renowned Patong beach, the Centra Ashlee Hotel Patong is a modern-contemporary-design hotel with a pool bar offering views of the Andaman Sea.

In the picture, Suthikiati Chirathivat (3rd from right), Chairman of the Executive Board of Centara Hotels & Resorts, exchanges the management contract for the Centra Ashlee Hotel Patong with Withaya Taweewongsap (3rd from left), Managing Director of Ashlee Co. Ltd., witnessed by Gerd Steeb (2nd from right), President of Centara Hotels & Resorts, Khanitha Jarukirati (left), Associate Director of CB Richard Ellis, and other executives.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for August 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi and Don Muang airports were 1,259,584 in August 2010 compared to 1,177,333 in August 2009, an increase of 7% Y-o-Y and an increase of 1% on August 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were  544,595 in August 2010 compared to  587,006 in August 2009, a 7% decline on August 2009 disembarkations but an increase of 7% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 121,666 in August 2010 compared to 86,829 in August 2009, a 40% increase. This represents a 50% increase on August 2008 figures. Domestic passenger disembarkations were 144,739 compared to 142,798 in August 2009, an increase of 1% on August 2009 and an increase of 17% on August 2008 figures.

The Airports of Thailand Public Company Limited (AOT) has announced the air transport statistics for July 2010.

Total international passenger disembarkations at Bangkok’s Suvarnabhumi airport were  1,328,131 in July 2010 compared to 1,171,857 in July 2009, an increase of 13% but this represents a 1% decline on July 2008 disembarkations. Domestic passenger disembarkations at Suvarnabhumi and Don Muang airports were 499,124 in July 2010 compared to 519,979 in July 2009, a 4% decline on July 2009 disembarkations but an increase of 2% on 2008 disembarkations.

International disembarkations at Phuket’s airport were 114,007 in July 2010 compared to 80,528 in July 2009, a 42% increase. This represents a 27% increase on July 2008 figures. Domestic passenger disembarkations were 144,999 compared to 140,962 in July 2009, an increase of 3% on July 2009 and an increase of 7% on July 2008 figures.

“This shows that tourist arrivals are recovering faster than many people expected”, according to Natapat Watanakulchai who specializes in research on hotel market in Thailand for CB Richard Ellis.

The property is located on the Siray Island which is connected by bridge to the east coast of Phuket and is only a short distance from Phuket Town.

The reservation website showed a room rate of THB 10,250 for one night on August 11 2010 for a superior sea view room (50 square meters).

By comparison the following rates were being offered by competing properties nearby 

There are numerous hotels under construction on the East of coast Phuket including Four Points by Sheraton Phuket in Makham Bay, the Regent Phuket Cape Panwa, and the expansion of Novotel Phuket Beach Resort Panwa.

We expect that there will be a 35% increase in Phuket hotel rooms over the next three years.