Southeast Asia’s real estate love affair between property developers and hotel brands is morphing into a feeding frenzy and with nearly 100 mainstream hotel residence projects plus over 21,000 units completed, the next three years is set to take the sector into bold new territory.

According to C9 Hotelworks new SE Asia focused Hotel Residences Market Trends (between 2018 and 2020) new completed units will represent a massive 83% rise over existing supply. The Top 5 pipeline project locations in order of volume are Danang, Phuket, Kuala Lumpur, Bali and Bintan.

Looking at changing trends, if we’d roll back the clock 18-24 months, urban projects were part of a shifting landscape, but today investment buyers are back heavily in resort destinations, especially Vietnam. Market-wide average sales price per square meter in the region (excluding Singapore) is US$5,713 in urban areas and US$3,207 in resort destinations.

Examining the geographic source of property buyers, Thailand’s more mature market is deeper with foreign purchasers, while Indonesia and now Vietnam are tracking an onslaught of domestic demand, back of a skyrocketing consumer class.

As for the attraction of hotel branded real estate C9 Hotelworks latest research reflects that market-wide premiums of recognized hospitality groups range between 25-35% versus independent properties.

Chains that are most active includes Marriott, Banyan Tree, Hyatt, Melia, Minor and Mövenpick along with brands that have used hotel residences to spur their pipelines such as BHM Asia and Alila.

Despite the growth storyline, there is a a warning sign for both developers and property buyers over the onslaught of projects offering high levels of guaranteed returns over sustained periods. Danang is one location that has all the signs of a recipe for disaster with recurring returns being promoted at 10.5% on a long-term basis.

Compounding the outlook is the strong take up in the domestic segment with purchasers leveraging debt at extraordinary levels. If returns fail to materialize at the promoted numbers, developers will be unable to fund returns, buyer will forfeit units to banks and market values could evaporate. It could be a perfect storm and wider regulation for consumers over guaranteed returns across Southeast Asia is sorely needed.

To download the report CLICK HERE.

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. www.c9hotelworks.com