2022 good time to invest in Malaysian hotels, says property specialist
12 Apr 2022
Property consultant Knight Frank Malaysia says there is a strong appetite for hotel investments in the country.
According to a Knight Frank Malaysia survey, more than 60 per cent of respondents were looking to increase their exposure to the sector.
Knight Frank’s Malaysian Hospitality Investment Intentions Survey showed that 64 per cent of respondents were considering increasing their exposure to the Malaysian hotel sector, a sharp hike in comparison with 36 per cent back in 2020.
The survey revealed that 36 per cent of respondents were not interested in increasing their exposure in hotels but this was a significant drop compared to the 64 per cent in 2020.
“This is a positive sign that sentiment towards the sector is returning,” it said.
Knight Frank Malaysia executive director capital markets James Buckley said given the last two tumultuous years, it was not surprising that investments in hotels across Malaysia had fallen from a 2017 high of RM2.2 billion to just RM556 million in 2020 and RM177 million in 2021.
Buckley said since its first survey, the firm had seen a rapid and widespread distribution of Covid-19 vaccines globally, an increasing list of countries opening their borders to international travellers and airlines re-establishing some of their flight networks.
“International travellers’ confidence is slowly returning and this is filtering through to the 2022 survey with investor sentiment recovering.
“We do expect to see an increasing number of hotel transactions over the next 24 months,” he said.
Knight Frank said investors continud to seek high returns to offset the risk of investing in the sector.
Thirty-three per cent of respondents were targeting a net yield of above seven per cent (versus 36 per cent in 2020) when acquiring a four to five-star hotel in Malaysia, the survey said.
Buckley said investors were seeing 2022 as a good time to invest in Malaysian hotels as they can see the economy was recovering, especially now that the borders had opened.
He said many can see the strong pent-up demand for holiday travel and in the short term, Singapore tourists, coupled with domestic demand would 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.
“Although bank financing of hotels has been quite difficult during the pandemic, banks will also see the improvements in the sector and begin to lend again,” he added.