Singapore hotel owner CDL Hospitality Trusts is on the lookout for acquisitions in Vietnam, India and Japan with a potential war chest of about $550 million, its chief executive said on Monday.

The trust, which owns five hotels in Singapore, also said there was potential for room rates in the city-state to rise further and that income from its own hotels could rise as existing corporate agreements are renewed at higher rates.

“It’s got some more room to go, more upside. In terms of generic property prices, Singapore is certainly very much right up there and if you look at hotel as a property asset, it’s very much lagging behind,” Vincent Yeo, the property trust’s chief executive, told Reuters in an interview.

“We hope to acquire a couple of assets in the next 18 months,” he added.

“Singapore is still our favourite market by far in terms of feasibility and prospects, but we can’t just confine ourselves to Singapore, so we are looking at other countries within Asia Pacific, for example, Vietnam, India and Japan.” He said the company was not looking at China.

“Most hotels in Chinese cities are doing very badly right now and there’s been severe over-building...Occupancies are low and rates have fallen as a result, but yet people are still building (hotels),” Yeo said.

CDL Hospitality, which currently has a gearing, or debt to asset, ratio of 18.6 per cent, said it was comfortable with raising its gearing to up to 40 per cent.

“If we assume a 40% internal gearing limit, we would have an acquisition capacity of $550 million,” he said.

CDL Hospitality, which owns hotels in Singapore, Australia and New Zealand, is managed by a unit of City Developments, Singapore’s and Southeast Asia’s second largest property firm after CapitaLand.

Yeo said he expected the average hotel occupancy rate in Singapore to hit 90-95% in the third quarter, and said CDL tracks the industry average closely. CDL had an occupancy rate of 88.5% in the second quarter, while Singapore Tourism Board data showed Singapore hotels saw an average of 88% in June.

He added that he expected more upside for Singapore’s hotel room rates, as they were trailing that of other major cities like Hong Kong and Moscow.