Hotel yields in Singapore are expected to be among the lowest in the Asia Pacific region, at between 3.5 percent and 4.5 percent in 2018, reported Singapore Business Review citing Savills Singapore.
Hong Kong hotels are expected to have the lowest yield of 2.5 percent to 3.5 percent, while Melbourne is expected to post a much higher yield of between five percent and six percent.
Savills noted that overall prime location yield levels could see potential downward adjustments as secondary markets experience an improving investor confidence.
Singapore hotels continue to be tightly held even as interest from foreign investors has been strong. With the current trends, Savills expects the pricing gap between sellers and buyers to narrow, while the market starts to witness some significant deal flow.
“Regional players may consider taking on more opportunistic deals in their respective markets to meet higher yield expectations,” said Savills Research senior director Simon Smith.