GlobalHotelNetwork.com: Where do you see the best opportunities for hotel investment or development?
Govinda Singh: "Tourism across Asia continues to grow especially as the middle income population of key source markets (such as China, India, Malaysia and Indonesia) continues to expand.
In addition, tourism in Asia remains largely regional and indeed in some markets (eg China and Indonesia) there is a significant domestic segment making them less vulnerable to economic shocks in the West. As such, the outlook for tourism and therefore hotel demand across the region remains largely positive.
In the investment market across Asia, especially in mature destinations, valuations remain high, with yields in emerging markets compressing. This is mainly underpinned by the desirability of hospitality assets, an illiquid market and relatively cheap availability of capital.
The most active markets for investment remain Japan (underpinned by the upcoming Rugby World Cup and 2020 Olympics) and Hong Kong, although this has also slowed in recently given the high valuations and relative lack of assets available for sale. The most active markets for development are those that typically have higher land prices and where yields remain high. These tend to be in more emerging destinations such as Vietnam, Indonesia and Thailand.
Given this background, more and more investors are turning to development as the potential returns are much higher than buying existing, even given the opportunity cost. This is particularly true of key gateways cities across the region, such as Singapore, Tokyo and Hong Kong, where the propensity to buy is driven more by long term capital appreciation, rather than short term yield.
In summary, for investors chasing yield, development and investment in second and third tier cities across Asia continues to offer the best value. For longer term investors, investment will continue to be in key gateway cities."