Southeast Asia’s hotel residences real estate market has topped the IDR 217 trillion level and is growing. Contributing to the regional push is the marriage between international and domestic hospitality brands and Indonesia’s property developers, which has IDR31 trillion in properties for sale.
According to new research by Asia-based hospitality consulting group C9 Hotelworks there are currently over 28,000 hotel branded residential units for sale across seven SEA nations represented by nearly 120 projects. Within Indonesia which is the second largest in Southeast Asia, the market-size is reflected with 28 new projects on the supply side. In terms of the top locations in the country for hotel residences Bali, Jakarta, Bintan and Lombok. The average price per square meter for urban properties is IDR 93 million a square meter, while in resort destinations the number edges down to IDR 58.8 million.
One key catalyst for the rising tide has been an increasing number of mixed use projects that contain hotel and real estate components. Recognized hotel brands are being tapped to help engineer-pricing premiums for property sales, which in market-wide terms has equated to an upside of 26% in resort locations and 14% for urban products compared to independent projects. Brand dogma has firmly attached itself to the newly defined hotel and real estate partnership.
In Jakarta premium projects such as the Raffles developed by Ciputra and more recently Langham Residences have demonstrated strong sale pace and high-pricing points. Broader midscale offerings are now creating a wider presence in areas such as Bogor in the condominium hotel (condotel) sector.
Commenting on the research C9’s Managing Director Bill Barnett said “the historic pattern of hotel and real estate marriages has moved away from the beach and leisure destinations and is gaining traction in urban city offerings. Traditional lifestyle buyers are being supplanted by end users, with Indonesian’s representing the largest transaction segment.
What is clear in looking at the landscape is that rapidly escalating land prices are driving developers to embrace mixed-use projects in increasing numbers, and often add in commercial, sporting and tourism attractions as part of broader lifestyle offerings.”
C9 Hotelworks’ report highlights a refocus by global hotel chains who have realized that in order to spur growth the essential need is there to partner with property developers in hotel residence offerings. Key groups in the sector are Louvre, Singapore’s Banyan Tree, Starwood, Shangri-La and Ritz-Carlton. Boutique chains such as Alila have also successfully gained profile with high value partnerships. In Indonesia, the key players in the segment are Archipelago, Tauzia and Swiss-Belhotel.
A growing number of new projects coming in the country continue to include hotel brand alliances. Indonesian developers have been hit hard by US dollar debt levels and are concerned over a broad market downturn hence they see a move into hotel assets as one that can mitigate project risk and bring in recurring sustainable income Breaking down the broad hotel project pipeline it’s clear that a significant number of projects now contain both traditional accommodation elements and real estate components. It’s forecast that a further push in urban city mixed-use development will continue in the next few years. That said there are concerns of oversupply in the Bali condominium hotel sector.
While hotel branded residences are currently a blue sky real estate product, C9’s Bill Barnett is mindful to comment, “Asia and the Indonesia property cycles have typically seen these type of investment driven projects at the top of markets in the mid 1990’s and again in the mid-Millennium, hence history is recreating itself, yet this time out at a considerably higher scale.”
|Banyan Tree, Bintan|
About C9 Hotelworks
C9 Hotelworks is led by founder and Managing Director Bill Barnett, who brings over 30 years' experience in the Asian hospitality and real estate sectors. Prior to founding C9 in 2003, Bill held senior executive roles in hotel operations, development and asset management. He is considered to be a leading global authority on hotel residences, and has sat at almost every seat around the hospitality and real estate table. Bill promotes industry insight through regular conference presentations at key events and contributes to numerous industry publications. More info: www.c9hotelworks.com