Investment
Hotel investment dominated by Australia and Hong Kong during first half of 2017
Gateway cities provide positive long-term tourism fundamentals, but investors are considering alternative investment in key emerging tourism markets, according to real estate consultancy JLL.
Hotel investors remain focused on gateway cities such as Hong Kong, Singapore, Sydney and Melbourne, as they offer positive tourism and trading fundamentals while the long-term demand and supply is in balance.
Investors also continue to seek opportunistic investments in key emerging tourism markets such as Vietnam.
Asia Pacific hotel investment volumes in the first half of 2017 were just over US$2.9 billion, with a shortage of investment grade hotels on the market compared to the previous few years. JLL recorded 28 hotel deals across six countries that amounted to over 5,000 keys, with the average price per key of all transactions recorded at US$486,600.
Airbnb and other alternative accommodation operators have disrupted hotel performance in many larger cities. A legislative bill passed by the National Diet of Japan in June 2017 now outlaws illegal operators from 2018 in Japan.
For the first time since 2013, no Japanese transactions made it into the Top 10 single-asset transactions list with limited big ticket deals recently on the market. On the other hand, portfolio transactions in Japan remain eagerly contested and the country’s long-term tourism outlook remains positive with the upcoming Summer Olympics in 2020.
“Hong Kong and Australia have been the standout markets in the region in terms of inbound investment, amounting to just under US$1.5 billion altogether, driven by robust tourism growth and solid trading performance driving investment activity in Australia,” says Frank Sorgiovanni, Head of Research, Asia Pacific at JLL Hotels & Hospitality Group.
Australia remained a firm favourite for Asian-based hotel investors, with several buying opportunities coming onto the market recently. The hotel investment market in Australia remained active with a number of key transactions across Sydney and Melbourne. The majority of deals took place in Melbourne, with the exception of the InterContinental Sydney Double Bay selling for US$104 million, the highest value recorded for a suburban hotel in Sydney. The property was acquired by a China-based consortium of investors.
The recently opened International Convention Centre will provide a further boost to Sydney’s hotel trading performance and MICE industry, with new supply in the pipeline that will be welcomed as the city’s marketwide occupancy continues to near capacity.
“Hotel transaction activity is expected to continue in Australia throughout the year given the low interest rate environment, sound economic growth outlook and weaker Australian dollar,” adds Mr Sorgiovanni. “However, opportunities to acquire hotels in many gateway Asian destinations is limited and investors continue to seek alternative investment in emerging markets such as Vietnam or Cambodia, where arrivals’ growth is strongly supported by Chinese tourism.”
After the recent rebranding of Hoi An’s The Nam Hai, which is now under Four Seasons management, an ever increasing range of resort locations are expected to gain greater attention from international hotel operators, whilst investors continue to circle for deals. “We remain particularly bullish about Vietnam's growing tourism and thriving economy, which has foreign investors from across the region attracted to its hotel and resort market over the past 18 months. The country has become one of the most talked-about markets in Asia Pacific,” says Mr Sorgiovanni.
Investors also continue to seek opportunistic investments in key emerging tourism markets such as Vietnam.
Asia Pacific hotel investment volumes in the first half of 2017 were just over US$2.9 billion, with a shortage of investment grade hotels on the market compared to the previous few years. JLL recorded 28 hotel deals across six countries that amounted to over 5,000 keys, with the average price per key of all transactions recorded at US$486,600.
Airbnb and other alternative accommodation operators have disrupted hotel performance in many larger cities. A legislative bill passed by the National Diet of Japan in June 2017 now outlaws illegal operators from 2018 in Japan.
For the first time since 2013, no Japanese transactions made it into the Top 10 single-asset transactions list with limited big ticket deals recently on the market. On the other hand, portfolio transactions in Japan remain eagerly contested and the country’s long-term tourism outlook remains positive with the upcoming Summer Olympics in 2020.
“Hong Kong and Australia have been the standout markets in the region in terms of inbound investment, amounting to just under US$1.5 billion altogether, driven by robust tourism growth and solid trading performance driving investment activity in Australia,” says Frank Sorgiovanni, Head of Research, Asia Pacific at JLL Hotels & Hospitality Group.
Australia remained a firm favourite for Asian-based hotel investors, with several buying opportunities coming onto the market recently. The hotel investment market in Australia remained active with a number of key transactions across Sydney and Melbourne. The majority of deals took place in Melbourne, with the exception of the InterContinental Sydney Double Bay selling for US$104 million, the highest value recorded for a suburban hotel in Sydney. The property was acquired by a China-based consortium of investors.
The recently opened International Convention Centre will provide a further boost to Sydney’s hotel trading performance and MICE industry, with new supply in the pipeline that will be welcomed as the city’s marketwide occupancy continues to near capacity.
“Hotel transaction activity is expected to continue in Australia throughout the year given the low interest rate environment, sound economic growth outlook and weaker Australian dollar,” adds Mr Sorgiovanni. “However, opportunities to acquire hotels in many gateway Asian destinations is limited and investors continue to seek alternative investment in emerging markets such as Vietnam or Cambodia, where arrivals’ growth is strongly supported by Chinese tourism.”
After the recent rebranding of Hoi An’s The Nam Hai, which is now under Four Seasons management, an ever increasing range of resort locations are expected to gain greater attention from international hotel operators, whilst investors continue to circle for deals. “We remain particularly bullish about Vietnam's growing tourism and thriving economy, which has foreign investors from across the region attracted to its hotel and resort market over the past 18 months. The country has become one of the most talked-about markets in Asia Pacific,” says Mr Sorgiovanni.
