Strong interest of foreign investors in Phuket’s resorts – JLL report

PHOTO: Dhawa Phuket

“In the Asia Pacific, Phuket is one of the three hotel investment markets in the region that have been highlighted.”

Buoyed by the rise of experience-driven travel and an affinity toward locally-inspired hotel offerings, resort assets remain a top target among investors. According to JLL Hotels & Hospitality’s Global Resort Report, resort sales accounted for 20% of all hotel sales in the Americas, while Europe, the Middle East and Africa, and Asia-Pacific’s resort sales totalled 7% of all hotel sales. Across all regions, private equity funds emerged as resorts dominant buyer, accounting for 20-50% of annual resort transaction volume in each market.

In the Asia Pacific, Phuket is one of the three hotel investment markets in the region that have been highlighted.

Phuket saw a total of 4.85 billion baht of resorts sold between 2014 and the first half of 2019. Half of these resorts achieved a transacted price at above 950 million baht. According to JLL’s report, investment activity over the period was dominated by foreign investors whose acquisitions accounted for 79% of the total investment volume, with the largest inbound capital coming from Singapore (58%). Findings from JLL also show that developers were the most acquisitive group, accounting for over 65% of total transaction volume on the island, followed by hotel operators at 20%.

Strong growth in tourism has contributed greatly to Phuket’s appeal as a hospitality investment destination. Total overnight visitors to the island have grown steadily over the past decade (2008 to 2018), with international and domestic visitation registering a CAGR of 10.9% and 9.9%, respectively. International overnight visitors accounted for 72.7% of total arrivals.

Pitinut Pupatwibul, Senior Vice President – Strategic Advisory, JLL’s Hotels and Hospitality Group, says the number of international visitors to Phuket is likely to taper off slightly due primarily to surging Thai Baht and unfavourable global economic conditions.

“However, investors have continued to show keen interest in acquiring quality resort assets in Phuket as they remain confident in the long term outlook for the tourism market of one of the world’s most popular holiday destinations.”

“In addition, increased air connectivity, lower barriers of entry through visa fee waivers and limited future supply are expected to bode well for Phuket’s resort segment in the medium to long term.”

According to JLL’s Hotels and Hospitality Group, the total stock of resorts in Phuket stood at 14,300 rooms at the end of June 2019. An estimated 540 resort rooms are planned for completion between the second half of 2019 and the end of 2021, accounting for less than 4% of the existing stock.

Read the full JLL Global Resort Report HERE.