Singapore-based Hoi Hup Realty has entered into a binding agreement to buy the Andaz Singapore hotel, according to a statement posted today on the developer’s website, in what ranks as the largest ever purchase of a single hotel asset in Singapore.
“We are attracted to the rarity of this high-quality luxury hotel offering, its historic significance being one of the established projects by M+S Pte Ltd,” Hoi Hup Realty’s chairman, Wong Swee Chun said.
Wong’s company is paying S$475 million ($344 million) to purchase the 342-room luxury hotel from M+S Pte Ltd, a 60:40 joint venture between Khazanah Nasional Berhad and Temasek Holdings, according to property services firm JLL which represented the sellers of the property.
The investment by Hoi Hup, which previously built the 250-room Marriott Courtyard in the city’s Novena area, comes just over two months after European insurance titan Allianz and Singapore’s Gaw Capital acquired the office and retail components of the Duo development for S$1.6 billion.
Unlocking S$1.4M Per Key
Based on the agreed transaction price, Hoi Hup Realty will be paying S$1.4 million per key for the property, which was the first of Hyatt’s Andaz hotels to be launched in Southeast Asia last year.
“This record sale illustrates the confidence investors have in Singapore and its hotel real estate market,” says Mike Batchelor, CEO Asia of JLL Hotels & Hospitality Group, which acted as the exclusive advisor to M+S Pte Ltd.
The latest edition to Hoi Hup’s portfolio occupies the top 15 floors of the 39-storey Duo Tower, offering 26 suites, a rooftop bar, sun lounge and a pool on the twenty-fifth floor. A standard room at the 5-star boutique hotel costs $377 per night.
Wong said that the hotel’s location in the rejuvenated Beach Road / Ophir-Rochor Corridor, directly opposite GuocoLand’s S$2.4 billion commercial and residential complex, gave him confidence that the asset would become one of the leading luxury hotels in Singapore.
The hotel is a twenty-minute drive from Changi Airport and 200 metres from the Bugis metro station, which is two stops away from Raffles Place in Singapore’s downtown core.
Under the terms of the deal, Hoi Hup Realty will buy the entire issued and paid-up share capital of Ophir-Rochor Hotel Pte Ltd, the holding company for Andaz Singapore.
Projected S$2.5B in Hotel Transactions by End of 2019
The agreement between Hoi Hup and M+S marks the second major transaction involving a hospitality asset in Singapore in just over four weeks, with analysts expecting more deals as 2019 progresses.
“Together with other pipeline transactions, the sale of the Andaz is expected to bring total transacted hotel volume in Singapore to a new peak of S$2.5 billion by the year end,” said JLL’s Batchelor.
Just last month, a joint venture between Far East Consortium and Hong Kong Investment bank AMTD Group agreed to pay a combined S$289 million for the Oakwood Premier OUE Singapore.
Based on the proposed transaction price, the Far East-led joint venture will be paying the equivalent of S$1.1 million per key for the 268-room set of serviced apartments at 6 Shenton Way in Singapore’s downtown core.
At the same time, a separate joint venture backed by the two companies paid S$1.9 million for a hotel license and operating business associated with the asset.
Two months before that deal on Shenton Way, a consortium involving Datapulse Technology and a capital partner identified on a stock exchange filing as PAM Holdings I (BVI) Ltd purchased the Bay Hotel Singapore for S$235 million.
The consortium paid Fiesta Development Pte Ltd S$736,700 per key for the 319-room hotel, which is located opposite the Vivocity complex near the southern tip of Singapore and is currently operated as the Travelodge Harbourfront.
“The Singapore hotel market has traditionally been tightly held, however, we are seeing increased liquidity in the market, driven by the strong weight of global capital seeking opportunities in perceived safe haven destinations,” said JLL Hotels & Hospitality Asia’s head of investment sales, Nihat Ercan.
In July, Allianz acquired a 60 percent stake in the Duo Tower and Duo Galleria, while Gaw Capital acquired the remaining 40 percent on behalf of a sovereign wealth fund.
The consortium paid the equivalent of S$2,590 per square foot for the combined complex, which incorporates 557,972 square feet (51,837 square metres) of grade A offices and 56,000 square feet of retail space.