Singapore Hotel Investment Market Sets New Record in 2006

The Singapore hotel investment market set a new record in 2006 with seven hotel-related transactions in excess of Sin$1.5 billion. In addition, five sites, including the commercial/hotel Collyer Quay site, were sold for more than Sin$470 million under the Government Land Sales Program last year.

Mr. Scott Hetherington, Jones Lang LaSalle Hotels’ Managing Director in Asia, commented, “Singapore is undoubtedly one of the ‘hottest’ hotel investment markets in Asia Pacific last year. The upturn in hotel trading performance has simultaneously attracted intense interest in Singapore hotel assets and enticed some hotel owners to capitalise on the aggressive investor market. 2006 has been an exceptional year for Singapore’s hotel investment market.”

Last year’s hotel transactions included the sale of Hotel Negara (now known as Negara on Claymore), Hotel Asia, Grand Plaza Parkroyal (now known as Grand Plaza Park Hotel City Hall), InterContinental Singapore, Swissotel the Stamford and Raffles the Plaza, Mandarin Orchard Hotel (now known as Meritus Mandarin Singapore Hotel) as well as one confidential sale. This compares to about Sin$330 million worth of hotel/land sales in 2005 (excluding Raffles Hotel as part of the Raffles Holdings global portfolio sale to Colony Capital).

Investors polled in Jones Lang LaSalle Hotels’ latest Hotel Investor Sentiment Survey have expressed strong optimism in the short and medium-term hotel trading performance of hotels in Singapore. “Investor sentiments for Singapore showed a marked improvement compared to our last survey. In fact investors are most upbeat about Singapore’s hotel sector over the next 24 months outside of China and India,” said Mr. Craig Collins, Executive Vice President of Jones Lang LaSalle Hotels.

That industry players are confident about the prospects of Singapore’s hotel sector is evident from the keen competition amongst developers in the public tender of five hotel sites in Singapore in 2006 that fetched more than Sin$470 million in total. Last August the site at Clemenceau Avenue/Unity Street was sold for Sin$55.5 million. At Sin$466 psf per plot ratio (ppr), the price was 55% higher than the Sin$300 psf ppr fetched for a Bras Brasah hotel plot next to Carlton Hotel in January 2005. The Mohamed Sultan/Nanson Road site fetched Sin$45.8 million – the psf ppr of Sin$518 was a further 11% higher than that registered for the Clemenceau Avenue/Unity Street site. The sale prices for the sites at Bencoolen Street and Sinaran drive were Sin$73 million (Sin$451 psf ppr) and Sin$131.1 million (Sin$501 psf ppr) respectively. The commercial/hotel site at Collyer Quay, sold in December for Sin$165.8 million, will feature a luxury boutique hotel that will occupy about 45% of the gross floor area with a good mix of complementary uses including F&B, retail and entertainment.

Mr. Hetherington said, “The keen interest shown in the sites by both domestic and overseas developers indicates that they are confident about the future prospects of Singapore’s tourism, conference/exhibition and hotel industries, buoyed by a strong trading environment and the arrival of integrated resorts which will radically alter Singapore’s tourism landscape and enhance its long-term growth potential. The stage is set for more exciting times ahead.”

As a show of confidence in the Singapore and the region on the whole, Jones Lang LaSalle Hotels is beefing up its investment sales team with the addition of Mr. Nihat Ercan, Vice President, increasing the Singapore-based team to four. “The Asia Pacific region as a whole posted historical high in 2006 in terms of transaction volume. We expect the momentum to continue in 2007 as new markets open up and become more transparent, driven in part by financial structures such as REITs. Supported by a team of 38 including our China and Tokyo teams, we are well positioned to ride the wave of opportunities in the region,” said Mr. Hetherington.

Mr Ercan who lived in Singapore in the mid 80’s has worked in the hotel property industry for six years in both a transaction and an advisory capacity. Prior to relocating to Singapore, he was based in Jones Lang LaSalle Hotels’ London office and undertook investment and advisory work across the United Kingdom, Europe, and Turkey. His investment sales track record includes the disposals of Swissôtel The Howard, Marriott Park Lane, and Crowne Plaza London – The City hotels in London. In the UK, Mr Ercan also completed the refinancing of the Sanderson and St Martins Lane hotels in London.

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