Southeast Asia’s hotel residences real estate market has topped the US$16 billion level and is growing. Spurring the trend is an emerging synergy between the region’s property developers and international hotel chains.
According to new research by hospitality consulting group C9 Hotelworks, Bangkok, there are currently over 28,000 hotel branded residential units for sale across seven SEA nations represented by nearly 120 projects. Average sales prices for urban offerings is US$4,870 per square meter except in Singapore where the number skyrockets to US$25,000.
One key catalyst for the rising tide has been an increasing number of mixed-use projects that contain hotel and real estate components. Recognized hotel brands are being tapped to help engineer pricing premiums for property sales, which in market-wide terms has equated to 26% in urban locations and 14% for resort units compared to independent projects.
“The historic pattern of hotel and real estate marriages has moved away from the beach and leisure destinations and is gaining traction in urban city offerings,” said C9’s Managing Director Bill Barnett. “Traditional lifestyle buyers are being supplanted by end users, with Asian’s representing the largest transaction segment.”
The two leading Southeast Asian marketplaces are Thailand with 37% of all projects followed Indonesia at 22%. Key emerging counties are Philippines, Malaysia and Vietnam, though Cambodia has ranked in with some notable offerings. What is clear in looking at the landscape is that rapidly escalating land prices are driving developers to embrace mixed-use projects in increasing numbers, and often add in commercial, sporting and tourism attractions as part of broader lifestyle offerings.
C9 Hotelworks’ report highlights a refocus by global hotel chains, which have realized that to spur pipeline growth the essential need is there to partner with property developers in hotel residence offerings. Key groups in the sector are Louvre, Singapore’s Banyan Tree, Starwood, Shangri-La and Ritz-Carlton. Boutique chains such as Alila have also successfully gained profile with high value partnerships.
While hotel branded residences are currently a blue-sky real estate product, a mindful Barnett added, “Asia’s property cycles have typically seen these type of investment driven projects at the top of markets in the mid 1990’s and again in the mid-Millennium, hence history is recreating itself, yet this time out at a considerably higher scale.”