KNIGHT FRANK FORESEES STRONG APPETITE FOR MALAYSIAN HOTEL INVESTMENT

KUALA LUMPUR, April 12 (Bernama) -- The reopening of Malaysia’s international borders is boosting investors’ interest in Malaysian hotels, said Knight Frank Malaysia.

Its second Malaysian Hospitality Investment Intentions Survey, which analysed the level of investment demand, preferences and sentiment towards the sector revealed that 64 per cent of the respondents are considering increasing their exposure to the Malaysian hotel sector -- a sharp hike from 36 per cent in 2020. 

As such, the global property consultancy firm expects to see an increasing number of hotel transactions over the next 24 months as the investor sentiment is recovering, said Knight Frank Malaysia’s executive director of Capital Markets, James Buckley. 

“Many can see the strong pent-up demand for holiday travel and in the short term, Singapore tourists, coupled with domestic demand will drive hotel performance in 2022. 

“We expect to see hotel transaction volumes to increase in 2022 as the price gap between vendors and purchasers will narrow as investors become more optimistic with the border opening and increasing arrivals," he said in a statement today.

The property consultancy firm noted that investors continue to seek high returns to offset the risk of investing in the sector, with 33 per cent of respondents targeting a net yield of above 7.0 per cent when acquiring a four to five-star hotel in Malaysia. 

Meanwhile, 26 per cent of respondents are targeting net yields of 6.0 to 7.0 per cent, while 19 per cent would accept net yields of 5.0 to 6.0 per cent. 

Buckley also highlighted that Malaysia ranked as the top destination out of 140 countries in the MasterCard CrescentRating Global Muslim Travel Index 2021 for being the most Muslim-friendly holiday destination.

“Historically, Malaysia has attracted a diverse pool of international tourists from all over the world and is particularly well-positioned to capture the growth of Halal Tourism,” he said.

Although bank financing of hotels has been quite difficult during the pandemic, he is optimistic that the banks will see the improvements in the sector and begin to lend again. 

“The survey indicates that owners of Malaysian hotels tend to have quite conservative levels of debt. 

“Lower leveraged properties carry less risk and are better equipped to weather market fluctuations, and this might explain why we have not seen any notable distressed hotel sales during the COVID-19 pandemic," he said. 

The survey also revealed that the majority of the hotels have conservative levels of gearing.

It noted that 43 per cent of hotels have less than 49 per cent loan-to-value ratio, while 17 per cent have no debts at all. 

It also found that 31 per cent have loan-to-value of between 50 per cent and 69 per cent and 9.0 per cent have high gearing of above 70 per cent. 

Overall, the survey concluded that hotel owners with conservative gearing have managed to weather the pandemic storm and have not had to sell at fire-sale prices. 

-- BERNAMA