Knight Frank Survey reveals a strong appetite for hotel investment in Malaysia, with 64% of respondents looking to increase their exposure.


Knight Frank Malaysia, the global real estate consultancy, recently concluded its second survey of investment intentions in the hospitality industry in Malaysia. The survey analyzed the investment prospects of hotel owners, operators and owner-operators to draw a comparison with its previous survey to compare how they continued to be affected by Covid-19 in Malaysia, the level of investment demand, investment preferences and investment sentiment. towards the sector.

64% of respondents plan to increase their exposure to the Malaysian hotel sector, a sharp rise from 36% in 2020. 36% of respondents are currently not interested in increasing their exposure to hotels, but this is a significant drop from 64% in 2020. This is a positive sign that sentiment towards the sector is returning.

James Buckley, Executive Director of Capital Markets, Knight Frank Malaysia, says “Given the past two tumultuous years, it is no surprise that investment in hotels across Malaysia has fallen from a peak of RM2.2 billion in 2017 to just RM556 million in 2020 and 177 million RM in 2021. Since our first survey, we have seen rapid and widespread distribution. Covid-19 vaccines around the world, a growing list of countries opening their borders to international travelers and airlines restoring some of their flight networks. International traveler confidence is slowly returning and this carries over to the 2022 survey as investor sentiment picks up. We expect to see an increasing number of hotel transactions over the next 24 months.

Investors continue to seek high returns to offset the risk of investing in the sector. 33% of respondents are targeting a net return above 7% (compared to 36% in 2020) when acquiring a 4-5 star hotel in Malaysia. 26% of respondents are targeting net returns of 6-7% (vs. 29% in 2020), while 19% would accept 5-6% (vs. 29% in 2020).

He went on to say, “I think investors see 2022 as a good time to invest in Malaysian hotels. They can see that the economy is recovering, especially now that the borders have opened up. Many can see the strong pent-up demand for vacation travel and in the near term, Singapore tourists, coupled with domestic demand, will drive hotel performance in 2022. We expect hotel transaction volumes to increase in 2022 as the price gap between suppliers and buyers will narrow as investors become more optimistic as borders open and arrivals increase. Although bank financing for hotels has been quite difficult during the pandemic, banks will also see the improvements in the sector and start lending again.

Historically, Malaysia has attracted a diverse pool of international tourists from around the world and is uniquely positioned to capture the growth of Halal tourism. Malaysia ranked first out of 140 countries in the MasterCard CrescentRating Global Muslim Travel Index 2021 for being the most Muslim-friendly holiday destination, beating Turkey, Saudi Arabia and Indonesia. Traditionally, high-end hotels have not come to market regularly and the next 12 months provide a window of opportunity to acquire unique opportunities. “

The majority of hotels have conservative gear levels. 43% have a loan to value ratio below 49% while 17% have no debt. However, 31% have a loan-to-value ratio between 50% and 69% and 9% have a high debt ratio above 70%. Overall, hotel owners with conservative gears weathered the pandemic storm and didn’t have to sell at rock bottom prices.

“The survey indicates that Malaysian hotel owners tend to have fairly conservative debt levels. Properties with lower debt carry less risk and are better equipped to weather market fluctuations and could explain why we have not seen notable distressed hotel sales during the covid-19 pandemic,” he said. -he adds.

Source: Malaysian Hospitality Investment Intentions Survey Report 2022

For more information or to request a copy of the Malaysian Hospitality Investment Intentions Survey Report 2022, please contact Knight Frank using the details below.


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