Investment-grade asset sales and positive outlook for the city’s tourism are drawing investor interest
Bangkok – Property consultant JLL expects Hotel investment activity in Chiang Mai to rise this year. While a number of significant assets have been put up for sale, investor sentiment is improving in response to more positive outlook for Thailand’s post-lockdown tourism.
Chakkrit Chakrabandhu Na Ayudhya, Executive Vice President, JLL’s Hotels & Hospitality Group – Asia, says “Chiang Mai has been one of the most dynamic tourism markets in Thailand. International arrivals to the city during a pre-COVID period was ranked number 4 after Bangkok, Phuket and Pattaya. With the continued ease of travel restrictions across the region and Thailand, optimism is now growing. The market has recently seen a number of new openings and completions of major renovation projects such as Melia Chiang Mai having opened early this year and InterContinental Chiang Mai Mae Ping scheduled for opening by the year end.”
Chiang Mai is also one of the top hotel markets in Thailand that sees continued demand from both foreign and domestic investors. However, investment activity in the city was generally lower compared to other major hotel markets, largely due to the lack of investment-grade assets that were put up for sale, according to JLL.
“We expect the Chiang Mai hotel market to witness higher investment activity this year as there are a number of significant hotel assets being put up in the market,” says Mr. Chakkrit.
One of the most notable disposals being marketed by JLL is Dhara Dhevi Chiang Mai Resort recently won at the auction by Inter Far East Thermal Power Company Limited.
Situated on over 150 rai of land, a 15-minute drive from Chiang Mai International Airport, the 123-key resort is one of the most luxurious hospitality developments in Thailand and was operated as the Mandarin Oriental from 2004 to 2013. Due to the COVID-19 pandemic, the award-winning hotel has temporarily ceased its operation since April 2020.
Thavich Taychanavakul, CEO of Inter Far East Thermal Power, says “Our decision to dispose of Dhara Dhevi Chiang Mai is aligned to our strategy to divest non-core businesses. Advice from JLL suggests that this is a suitable time to do so as more positive outlook of Thailand’s tourism is putting Dhara Dhevi Chiang Mai in a position to attract well-capitalised investors looking to invest in a trophy hotel asset in Thailand.”
Pimpanga Yomchinda, Senior Vice President, Investment Sales Asia, JLL’s Hotels & Hospitality Group, says “Dhara Dhevi Chiang Mai is truly a unique offering, and we believe it will attract a healthy level of interest from the investor community. The trophy nature of this Lanna-style hotel is highly appealing as the development is an irreplaceable asset and is recognised as an important legacy of Chiang Mai.”
“The hotel also offers a great potential in value enhancement opportunities which include a major renovation to reposition the resort and a potential expansion on approximately 25 rai of vacant land,” she adds.
According to JLL, Chiang Mai saw only one hotel sale transaction worth THB 85 million in 2018, and there was no hotel investment activity recorded in 2019 and 2020. Last year one hotel investment transaction worth approximately THB 300 million was recorded.
So far this year, the city has seen one hotel investment deal worth THB 435 million that is close to completion.