The pandemic has exacted a toll on the hospitality industry, with more hotel owners putting their properties up for sale at below market rates, providing an opportune time for investors to make their move. Amid such a climate, hotels in Malaysia have attracted growing interest from investors.
Listings of Malaysia hotels for sale on Zerin Properties has increased by 40 per cent year-to-date, with rising interest from investors, both local and overseas.
Zerin Properties managing director and CEO, Previndran Singhe, shared that one of the reasons for the uptick in investor interest for hotel assets in Malaysia is that asking prices for these properties have dropped between 10 to 35 per cent as compared to pre-lockdown. As well, he added, the ringgit is very competitive in comparison with Singapore and US dollars.
He said: “Our investors are also strongly looking at Vietnam and the Philippines. Ownership structures in Thailand and Indonesia make investments a bit more challenging as compared with Malaysia.”
Previndran added that Malaysian-based investors are eyeing properties and making offers on hotels in Kuala Lumpur, Penang and Langkawi. Meanwhile, foreign buyers who have always shown interest in properties in Kuala Lumpur and Langkawi are now also looking at Kota Kinabalu and Johor, especially Johor Bahru and Desaru.
He said: “Interest is driven by the strong domestic rebound after the movement control order 1.0 last year, as well as robust markets overseas that have proven travel is still in demand. In Malaysia, travel recovery might take awhile but they are prepared to wait. Once 70 to 80 per cent of the population is vaccinated, I anticipate travel bubbles will be formed within South-east Asia first before extending beyond.”
The number of new Covid-19 cases has been increasing rapidly in the country to the point that the healthcare system is on the verge of collapse. This has resulted in the government imposing a ban on interstate travel nationwide since early 2021.
Insufficient assistance and support from the government coupled with harsh lockdowns that prevent hotels from accepting leisure guests, offering dine-ins at their restaurants and renting event spaces to organisers, have threatened the survival of hotel businesses this year.
Previndran shared: “We are seeing more and more hotel owners approaching us to sell their hotels over the past two months.”
Istana Hotel Kuala Lumpur had given notice to its associates last month that it would close on September 1. With the current harsh business environment, Previndran anticipates more hotel closures this year, across all locations in the country.
Malaysian Association of Hotel Owners executive director, Shaharuddin M Saaid, concurs with Previndran’s view and reveals two possibilities – hotel owners may choose to close temporarily and reopen when the business environment improves, or they may close for good and look for a buyer if the lockdown and ban on interstate travel continues indefinitely with no certainty of business recovery.
He has seen an increased number of enquiries from overseas investors seeking information on hotel properties, especially three- and four-star hotels in Kuala Lumpur.
He said: “Some property owners that have listed their properties for sale last year, but were unable to dispose of them, have lowered their asking prices. This is a good time for investors looking for a good deal.”
According to the Hotel Industry Survey Report by the Malaysian Association of Hotels (MAH), as of mid-June, out of 320 hotel respondents, two have permanently closed and 91 have shuttered temporarily. By percentage, almost 71 per cent are still operating, most of which are dependent on quarantine needs, while others are catering to guests from essential service sectors.
MAH’s CEO, Yap Lip Seng, said: “With (Covid-19) cases breaking new records these past two weeks and insufficient assistance and support from the government, I don’t see things improving anytime soon.”
He shared that the key to moving forward is highly dependent on the National Immunisation Programme, aimed at achieving herd immunity in the country.