The government is addressing supply shortage for visitor arrivals, analysts say.
A hotel site in Club Street which can yield up to 390 rooms caught the attention of analysts after it made it into the Confirmed List of the H2 2018 Government Land Sales (GLS) programme. Colliers International noted that it has been 10 years since a hotel site made it into the Confirmed List, with the last being the Bukit Chermin plot in H2 2008.
The Reserve List also had a White Site in Marina View which can provide an estimated 540 hotel rooms. Colliers Singapore head of research Tricia Song noted that the last time hotels were included in the list was in H2 2013, comprising three land parcels: Race Course Road/Perumal Road; East Coast Road; and Havelock Road.
Govinda Singh, executive director of Valuation & Advisory, Asia, Colliers International, commented, “We believe the policymakers have been pragmatic in their approach towards the sale of hotel sites via GLS, holding off new site launches for a decade to allow the relatively large number of rooms in the market to be absorbed. Now that concerns of an oversupply in hotel rooms have largely receded, the Government has stepped forth to provide land options for the hotel sector.
The last hotel site was awarded in 2014, said DBS Equity Research analyst Rachel Tan. “Given the dwindling new supply of hotels and the strong growth seen in visitor arrivals, we believe the new hotel site (located in Chinatown) would be able to replenish new supply into the industry as new supply dries out from 2020 onwards,” she added.
Singh explained further that the move to offer a hotel site on the Confirmed List (Club Street) and another White Site with a hotel component in the Reserve List (Marine View) lines up with the view that there is a shortage of hotel rooms in Singapore amidst stronger tourism growth in recent years, and even more so should Singapore meet its 20 million tourist arrivals target in 2020.
CBRE concurred with Singh and said, “This is testament to the optimistic tourism arrivals and spending numbers over the past 12 months, as well as healthy RevPAR (revenue per available room) levels.”
“Given the bright tourism prospects ahead, we believe the hoteliers would be very keen on the hotel offerings on both the Confirmed List and Reserve List,” she said. “The Club Street plot sits within a high demand – both corporate and leisure - area in Chinatown and plugs well into the rejuvenation of the Tanjong Pagar district nearby. The Marine View White Site also presents good opportunities being in the prime downtown, which has been earmarked as an exciting waterfront destination in the future.”
Do you know more about this story? Contact us anonymously through this link.