Alta Thoughts (November 2024)
By Rakesh Patel
How well is wellness doing? Nearly $9 trillion well, according to the latest research from the Global Wellness Institute, that forecasts this size of market by 2028, from $6.3 trillion in 2023. The sector now represents 6% of global GDP, with a growth rate of over 7% to 2028. Growth has exceeded GWI expectations, driven by the acute awareness of health and well-being due to the pandemic. Other underlying trends supporting growth are an aging population, chronic disease and increased focus on mental health.
Dominant sub-sectors are personal care, physical activity and healthy eating, and interesting growth areas are wellness real estate and wellness tourism.
Our Vikasa wellness retreat in Ko Samui recently ranked #2 on well-respected Yoga Journal’s list of the “8 Best Wellness Retreats in the World” for 2024, and Life Cafe Vikasa has been ranked #2 for the “Best Wellness Cuisine” in the prestigious Destination Deluxe awards. Vikasa has recently signed partnership agreements with HOMA in Thailand and Teardrop Hotels in Sri Lanka. Please reach out if you would like to know more about partnering with Vikasa Wellness.
Here are a few of our recent thoughts posted on LinkedIn. Always good to hear your feedback. You can follow us directly on LinkedIn and go to our website.
Asia Pacific Hospitality Spotlight September 2024
Hotel investment continues to lead commercial real estate transactions in Asia-Pacific in 2024. According to MSCI Real Capital Analytics (RCA), hotel transactions rose 20% yoy in the 1H 2024, in stark contrast to offices, which fell 37%, whilst industrial and retail each fell 8%.
Underlying growth drivers for hotels, include inflation hedge characteristics as an asset class, and the sharp recovery in tourist numbers in the region.
Japan investment has led the way in North Asia, following a surge in tourism, and the cheap yen and borrowing. Hong Kong continues to be impacted by less mainland China visitors, and China is likely to offer distressed opportunities. In SE Asia, Thailand is attracting increased interest, whilst Vietnam investment is likely to play catch-up with the surge in tourist numbers.
How big is the real estate ‘stranded asset’ problem?
The story of “stranded assets” in the UK is applicable globally. With the push towards net zero, owners are forced to make ROI calculations based on the cost of upgrading to new regulatory standards vs the potential change in rental income. If the numbers don’t stack up, owners may just walk away, particularly when it comes to older, smaller, non-prime stock. This comes against a backdrop of macro behavioural shifts meaning less demand for office and retail space.
How large is the problem? By some estimates the number could be $5tn globally of commercial property value at risk. An early challenge could come in the UK, with a 2030 target of commercial property having an energy performance certificate of a minimum B rating. Currently, 70% of floor space is C or less.
The positive news is refits are picking up and new buildings are greener. The large PLCs are provisioning for the new requirements and tend to focus on prime locations. The tail risk is with smaller investors and landlords, and whether they are taking the regulatory changes seriously and/or can they afford to upgrade, particularly given tenant and consumer shifts.
