• Investing in Singapore Hotels: A Complete Guide

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    Singapore is one of the most visited nations in Asia and attracts entrepreneurs, working professionals, and travelers. Hotel nights are in high demand even if the market was hit badly during the pandemic.

    The years ahead look promising though and as many as 70% of investors plan to invest in the Asia Pacific hotel sector, according to a poll made by JLL. Long-term growth and discounts are driving the demand.

    Investing in Singapore hotels can be lucrative but requires close collaboration with a local credible partner, understanding the buying process, and the market. In this article, I give you a helping hand and explain the basics.

    Topics covered:

    • Can foreigners buy hotels in Singapore?
    • The Singapore Hotel Market
    • Areas to invest in Hotels
    • Benefits of Buying Hotels in Singapore

    Can foreigners buy hotels in Singapore?

    Foreigners have no issues investing in commercial properties in Singapore and are treated similarly to locals. Examples of commercial properties available include hotels, shopping malls, office space, and industrial estates.

    There are a few but important reasons why it’s less overheated.

    First, the commercial real estate market is not as overheated as the residential market. Foreign investments in residential units impact local homebuyers as prices have increased significantly and are set to double by 2030, according to J.P. Morgan.

    No Hefty Additional Buyer’s Stamp Duty for Commercial Properties

    The Singaporean government has introduced hefty additional buyer’s stamp duties and seller’s stamp duties, to avoid speculation and fend off foreign buyers.

    At the moment, the additional buyer’s stamp duty reaches 20%, which is a considerable number when considering Singaporean property prices.

    Buyers of commercial real estate, on the other hand, are not subject to additional buyer’s stamp duties, even if the government levies a buyer’s stamp duty of up to 3%.

    Besides, residential land ownership is restricted unless you are a PR or sit on a large amount of cash.

    Land-Ownership for Foreigners

    Secondly, as stated on the Singaporean Land Authorities websites, foreigners can only purchase land on Sentosa Cove, without the need of being:

    • A permanent resident for at least 5 years
    • Make an exceptional economic contribution

    Hotels that are registered under the Hotels Act are not subject to such restrictions. To read more about the Hotels Act, you can visit the Singapore Statutes Website.

    The Singapore Hotel Market

    The hotel industry faced its toughest year during the pandemic as inbound travelers decreased by 85.7% to reach 2.7 million visitors. A great majority arrived in the first two months of 2020.

    Tourism receipts decreased by 78.4%, totaling just SGD 4.4 billion during the first three quarters.

    But, the hotel industry has proven to be resilient and forced actors to come up with creative ideas to stay competitive as well as profit-generating. For example, hotels emerged as important facilities for quarantine purposes.

    More than 2,300 workers from the hotel industry have supported these services and catered to more than 80,000.

    The government has supported the hotel industry with different support measures to transform products and offerings, as well as creating new capabilities to stay competitive and be prepared for future changes.

    The Future Transformation of Singapore’s Hotel Industry

    Thanks to the Job Redesign Reskilling (JRR) Programme, the service level, effectiveness, and customer experience will be enhanced.

    With the help of IoT and technology, housekeepers will track room cleanliness using mobile applications. Robots will also assist with cleaning, for maximized satisfaction among guests.

    Front office staff will also be trained to personalize itineraries, making the stays hassle-free. It’s also proposed that chefs will learn food waste management and be able to track food stock levels with the help of sensors.

    Singapore will remain an attractive nation for companies, entrepreneurs, and students, keeping the demand for hotel nights high.

    Areas to Invest in Singapore Hotels

    The largest concentration of hotels can be found in the Central Region and in the areas of Novena, Newton, Orchard, City, Boon Keng, and Tiong Bahru.

    The prices differ significantly depending on the standard of the hotels and the exact location.

    The hotel industry is diverse in Singapore and hostels with rates of USD 20 can be found a walking distance away from some of the most luxurious hotels. Let’s review some of the most interesting areas to invest in hotels.

    Novena

    Named after the Novena Church, Novena is part of the Core Central Region (CCR) and one of the nation’s 55 planning areas.

    Located further away from Marina Bay, rates are lower on average but you can still find prominent brands here. Courtyard by Marriott Novena Singapore and Days By Wyndham are located here.

    Rates typically stretch from around USD 50 to USD 200 depending on the location and standard of the hotel. Most of the hotels are located in the Eastern parts of the planning area and along the Balestier Road.

    Newton

    Newton is a planning area located north of the famous Orchard Road, one of the most popular tourist attractions with department stores, upscale boutiques, discount outlets, and luxury hotels.

    Located to the south of Novena and separated by the Dunearn Road, lodging costs are lower than the southern planning area of Orchard, but still within walking distance.

    Sheraton Towers Singapore is located in Newton and one of a few hotel establishments.

    The area is not as crowded nor expensive as the more southern districts and still offers good investment opportunities.

    Orchard Road

    Orchard Road is located to the south of Newton and needs no further explanation.

    Many of Singapore’s most premium hotels are located here, including names such as Singapore Marriott Tang Plaza, The St. Regis Singapore, Shang-Ri La, Grand Hyatt, and Four Seasons.

    The area is suitable for travelers who are willing to pay the highest fares and be right in the hustle-and-bustle, spending their nights out at bars and fancy restaurants.

    Rates have hovered at around USD 100 to USD 130 during the pandemic. Yet, some premium hotels also offer rates of USD 300 a night.

    City Area

    City Area, also referred to as Central Area, is the city of Singapore and with most of the upscale hotels and attractions.

    Chinatown, Marina Bay Sands, The Helix Bridge, Clarke Quay, Gardens by the Bay, and The National Museum of Singapore are all located here.

    While hotels offer lower rates in the Western parts and from around USD 90, The Fullerton Bay Hotel and Marina Bay Sands charge you around USD 400 a night. The rates go up during busy times.

    If you look for the most premium hotels in Singapore, then the City Area should be at the top of your list.

    Boon Keng

    Boon Keng is a large subzone within the planning area of Kallang. Compared to the above-mentioned areas, it’s not considered a Core Central Region (CCR) but defined as Rest of Central Region (RCR).

    Many people decide to stay here due to the lower rates, but with a short distance to the city’s major attractions.

    Boon Keng has been under the radar of many investors and has grown steadily in the past years. It’s famous for being the home of Little India, eateries, amenities, markets, and shops.

    You won’t find as many upscale hotels here, but rates can go as low as 30 US dollars per night in hotels.

    Tiong Bahru

    Tiong Bahru is located close to Orchard Road and just next to the City Area, but still considered the Rest of the Central Region (RCR). It’s home to many beautiful heritage low-rise buildings and cafes.

    It’s separated from the City Area by the Central Expressway (CTE) and a handful of hotels can be found in the Eastern parts, close to the City Area. A few hundred meters away to the right you can also find the old Chinatown.

    Hotels fetch lower prices here compared to the City but locals and travelers alike visit the area as it’s one of the best hawker centers in town.

    Tiong Bahru is probably not your best option if you look for a large-sized and premium hotel.

    Benefits of Investing in Singapore Hotels

    There are some outspoken benefits of buying hotels in Singapore compared to other neighboring countries. Below I’ve listed some of the main reasons why Singapore is interesting for hotel investments.

    High returns

    • Singapore might have low residential property yields. But, the hotel yields are comparatively higher on average compared to other countries in the region and also to other real estate classes
    • The same as for Hong Kong, the land is scarce and many hotels are concentrated in the prominent central areas. The yields are predicted to remain stable
    • Many of Singapore’s premium hotel owners are reluctant to sell but institutional investors continue to show great demand
    • Hotel investments are a relatively safe haven

    Tourism & business travelers

    • Singapore attracts plenty of tourists with high disposable incomes and the tourism sector is resilient
    • Many infrastructure projects and new attractions will be constructed by 2030, which will attract more tourists
    • The supply of room per capita is still relatively low

    That’s it for this article. I hope you found it useful and understand the strength of Singapore’s hotel market, despite the recent crisis. If there’s anything else you wonder about, feel free to write a comment below or send us a message directly.

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