Singapore Hospitality REITs - DBS Research 2023-04-04: Awaiting The “Travelanche” From China

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Forward-leading indicators show that Chinese travel demand recovery will be fast, wide, and furious, albeit from a low recovery base. Pent-up travel demand will spillover to neighbouring APAC countries such as South Korea, Japan, and Vietnam, where China was the number one source market making up ~30%-35% of the total inbound market as well as leisure-positioned destinations in the likes of Maldives.

Hotel S-REITs have a ~77% exposure to China-positioned travel markets.

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• Our hotel S-REITs have geographical exposure in 6 out of the top 10 China-destination markets, of which Singapore, Australia, and Japan have the largest exposures at ~56%, 10%, and 7%, respectively. We expect Chinese outbound tourism to stage a meaningful recovery in most of our S-REIT markets, given a combined exposure of ~77% to the top 10 China-destination markets will see Chinese demand as a key growth driver amongst our S-REITs for 2H23.

Recovery tracking ahead of our base case trajectory with a ~8.1% forward FY24F sector yield on our bull case forecast.

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Geraldine WONG DBS Group Research | Tabitha FOO DBS Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-04-04 SGinvestors.io

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