Quayside hotel for sale

Source : Straits Times - 29 Aug 2008

SWISSOTEL Merchant Court, a 476-room hotel near Clarke Quay, has been put up for sale by global tender.

It could fetch about $350 million, given the growth potential in Singapore’s hospitality sector, consultants said. Room rates start from about $250 a night, hotel booking websites show.

‘A hotel in (that) location can fetch around $700,000 to $800,000 per key,’ said Mr Mike Batchelor, managing director of Asia investment sales for Jones Lang LaSalle Hotels, which is handling the sale.

Owner Merchant Quay is controlled by fund manager LaSalle Investment Management, which bought the Swissotel Merchant Court for an undisclosed sum from Colony Capital early last year. It is rumoured to have paid under $200 million.

The hotel was one of 41 properties in the Raffles Hotels and Resorts chain that Colony Capital bought in 2005 for $1.45 billion from CapitaLand’s Raffles Holdings.

‘Singapore remains one of Asia’s most tightly held hotel investment markets and it is rare for more than one international standard hotel to be offered to the market in any given year,’ said Jones Lang LaSalle Hotels yesterday.

Mr Batchelor said: ‘High on the shopping list of international investors are countries such as Singapore which have the sustained support of their governments.’

Investors, including wealthy individuals from Asia, Russia, Europe and the Middle East, also like the fact that Singapore is a key gateway city, he said.

Singapore has a 10.8-million visitor target this year but arrivals registered the first decline in 51 months in June. July figures were also down.

The hotel investment market is slightly more cautious now but still optimistic, said the managing director of Cushman & Wakefield, Mr Donald Han.

Investors typically take a five- to 10-year view of the market and outlying fundamentals here are very strong, said Mr Batchelor.

‘In line with strong growth in visitor arrivals to Singapore and rising room rates, hotel values have increased.’

Swissotel Merchant Court recently went through a multimillion-dollar refurbishment, hence its contemporary-style rooms now provide a platform for future revenue growth, he said.

Whoever buys it will have the opportunity to further enhance the asset by redeveloping the prime riverfront space overlooking Clarke Quay, he added.