Supply of hotel rooms in Singapore to increase by 20%

The supply of hotel rooms in Singapore is expected to increase by 20 per cent by 2016, according to a report by real estate consultancy CBRE.

CBRE said the ramping up of room supply is underpinned by healthy outlook for the hospitality sector.

In 2011, over 1,900 hotel rooms have been added in Singapore, with the bulk of them coming from V Hotel with 888 rooms and Oasia Hotel with 428 rooms.

CBRE added that there’s also an increase in the number of gazetted hotels by 10, to 149 for the whole of last year.

By the end of 2013, CBRE predicts that another 4,028 rooms from 19 new hotels could come on stream.

On top of that, hotel projects currently in planning stage are also expected to boost supply by a further 5,200 rooms.

All in, they will provide an additional 3.4 million room nights per year by 2016, up by 22.4 per cent from 2011.

CBRE expects occupancy to hover between 83 and 86 per cent in 2012.

Meanwhile, average room rates are expected to rise by 5 to 10 per cent from 2011 levels.

Robert McIntosh, executive director, CBRE Hotels said: “The projected average occupancy rate for 2012 is still indicative of a very busy year ahead for the hospitality market. Island-wide revenue per available room (RevPAR) grew 14.6 per cent last year to S$212 and is expected to increase between 5.0 and 8.0 per cent this year. Upscale hotels, under which the two IRs are categorised, increased 16.5 per cent to S$244 from S$209 a year ago. ”

However, CBRE said the market does face some uncertainty including fluctuations in global demand and the Eurozone crisis.

In terms of investment volume, Singapore was the most active hotel investment market after China in 2011 with eleven transactions representing USD$1.15 billion, accounting for 22 per cent of the total investment volumes in Asia.

CBRE said hotel transaction volume across Asia Pacific is projected to reach US$5-6 billion in 2012, similar to the level seen in 2011.

Mr McIntosh added: “Some long-term owners in Southeast Asian countries are reportedly looking to exit to redeploy their capital elsewhere and these could open up more buying opportunities for investors. Looking ahead, the prime hotel yields in Asia are likely to remain stable. Assets with a lower risk profile will continue to be highly sought after by investors.”

Overall, CBRE said hotel room supply increased across Asia in 2011 with the addition of 42,368 new rooms in China, Hong Kong, Indonesia, Japan, Malaysia, Singapore, Vietnam, Thailand and Taiwan.

That’s up by 10.7 per cent over 2010.

Source : Channel NewsAsia – 14 Mar 2012

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