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CIMB Research expects the annual hotel supply in Singapore to crash to a 10-year low to 281 rooms by end-2018, from an average of about 3,000 rooms per annum between 2008 and 2017, reported Singapore Business Review.
While the dismal figure is expected to increase slightly to 1,680 rooms next year, the supply will taper off again by 2020 to 651 new rooms.
New hotel room supply is even expected to fall to a compounded annual growth rate (CAGR) of 1.3 percent in 2017 to 2020 from a CAGR of 5.5 percent between 2014 and 2017.
CIMB attributed the low hotel levels to Singapore’s chronic land shortage. In fact, the government has set aside less land for hotel development. CIMB data showed that from 101,798 sq m of gross floor area awarded in 2007, only 24,716 sq m was set aside for hotel development in 2014.
“Based on our checks on the URA website, we noted that there have been no new sites for the development of hotels since 2015,” noted the report’s authors.
However, not all is bleak for the hotel industry as the low room supply coincided with strong tourist arrivals. This gave hoteliers the confidence to increase room rates – which have been on the uptrend since February.
Singapore saw about 12.16 million tourists as of end-August.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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