Hotel Investors Missing in Action

Posted: 27 May 2009 | 9:27 am

Despite "The Nation's" banner front page news a few weeks ago about 100 distressed hotels for sale, the current search for hotel investors is becoming something akin to those looking for the next "American Idol. While Singapore's Jones Lang LaSalle Hotels current marketing of the 150 rai Laem Ka land which was to have been a Four Seasons Resort is attracting a number of overseas and Thai investors, the current transaction market has hit a standstill.

Talking to JLL's Managing Director of Investment Sales in Asia Mike Batchelor who summed up the regional state of play as very subdued with expectation of this trend well into 2010. Owners of existing properties and landowners who want to sell should prepare for write down asset values, though there look to be strategic opportunities emerging in the marketplace. Everyone is trying to figure out exactly where the bottom is at the moment so it's become a game of limbo.

The current debt market is for the most part frozen or term sheets simply are too unfavorable to pursue levering. This is resulting in cash sales with buyers looking to organize debt later once the lending market returns. The buyer's pool is limited with the collapse of firms such as Lehman's and a host of private equity and hedge funds; hence those acquiring assets are large Asian groups who are family ownered or high net worth individuals.

Here in Phuket we have seen over the past 12-24 months a dramatic shift from what used to by a market fueled by overseas listed institutions, and then petro dollars into now mainly Thai investors. There is little chance of a return to equilibrium until such time as the country opens up its policies and doors to international investors and sheds negative market sentiment.

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