Hotel investment volumes in Asia increased more than 200% in 2013, as the industry experienced its strongest year since the global financial crisis.
According to the latest data from JLL Hotels & Hospitality, the total value of Asian hotel transactions reached US$7.5 billion last year, up 218% compared to 2012. This marks the highest level of regional investment since 2007, when the transactions were worth US$10.3bn.
Singapore, Japan and mainland China led the region’s growth in 2013. Japan’s total investment volumes reached US$2.7bn, up 480% compared to 2012, as the hotel sector improved in line with the growth of the domestic economy and renewed confidence in the corporate and leisure travel sectors.
The Singapore hotel market saw record transaction levels in 2013, with volumes reaching US$2.0bn – more than 10 times that recorded in 2012. JLL said this was driven by the sale of Park Hotel Group’s Grand Park Orchard hotel, which marked the city’s largest single asset transaction to date.
Mainland China recorded US$1.1bn of hotel transactions, as government measures to provide improved access to financing drove investor sentiment over the second half of 2013. Other markets experienced strong growth as a result of China’s growth, including Hong Kong (US$ 486.7 million, up 19%), Thailand (US$337.0m, up 31%) and the Maldives (US$267.6m, up 614%).
“Strong investor sentiment and, importantly, the availability of quality hotel assets were key reasons behind Asia’s impressive sales volume in 2013 which was hindered only by the availability of additional stock as many owners increasingly hold off selling assets in anticipation of further market growth,” explained Mike Batchelor, JLL’s managing director of investment sales – hotels & hospitality.
“Mature hotel markets such as Singapore continue to be governed by well capitalised, inter-generational investors and as stock becomes increasingly limited, investors are now starting to look further afield once again at new and emerging markets in the region in the search for greater yield and capital growth opportunities.”
JLL forecasts 2014 to be a similarly stand-out year, although transactions volumes are likely to fall on the back of limited supply, despite strong demand.
“There remains no shortage of capital to be invested into the sector in 2014 (mostly from inter-regional Asian investors), however improved trading performance and the tightening of cap rates have elevated the expectations of the region’s sellers.
“The resulting restricted supply will shape activity this year and, while overall deal flow will remain robust, we expect volumes to moderate in 2014 because of fewer landmark transactions and portfolio deals in the key gateway locations,” Batchelor added.
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