Why investors scrambled for hotels in shophouses in Q3

Bright prospects for hotels loom.

According to Savills, by property type, the hospitality segment was the bright spark in Q3. Seven hotels were sold for a total of about S$2.9 billion (including the retail podium of Grand Park Orchard Hotel) or 21.0% of Q3’s total investment sales. Many of the recent transactions exceeded S$1 million per room.

Meanwhile, hotels in shophouses gained in popularity for investors, probably due to the smaller price quantum.

According to Singapore Tourism Board data, the average revenue per available room in the first seven months of this year was down by 3% year-on-year, due to the mix of a weaker events calendar, slower corporate demand and price competition from newly opened hotels.

Nevertheless, in the long term, hotel investments in Singapore should remain positive due to expectations of continued economic growth and a stable political environment.