Hospitality REITs, specifically Far East Hospitality Trust (FEHT), CapitaLand Ascott Trust (CLAS), and CDL Hospitality Trusts (CDREIT), are poised for substantial gains as leisure and business travel normalise, accompanied by the return of Chinese tourists.
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According to a report by UOB Kay Hian, the hospitality sector “provides an attractive 2024 distribution yield of 6.4% and trades at a low P/NAV (Price to Net Asset Value ratio) of 0.77x.”
“Consumers are shifting from material purchases like clothing, jewellery, electronic gadgets and furniture to experiential purchases like travel, restaurant meals and sporting events as happiness from experiences is more lasting,” UOB Kay Hian added.
Additionally, Hospitality REITs are expected to benefit from the many Singapore government initiatives aimed at improving tourism attractions. These initiatives encompass the expansion projects at Marina Bay Sands and Resorts World Sentosa, the development of the Mandai Nature Precinct, and the Sentosa-Brani Master Plan.
“At Resorts World Sentosa, Minion Land and Singapore Oceanarium are scheduled to open in early 2025. Sentosa Island and Pulau Brani will be rejuvenated and redeveloped into five distinct zones under the Sentosa-Brani Master Plan in phases over the next 2-3 decades,” UOB Kay Hian elaborated.
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